The US Federal Reserve raised the benchmark interest rate by another 0.75 percentage points and hinted that it will continue to raise the benchmark well above the level reached so far, the CBS reported.
In a battle to lower inflation, which has been approaching its highest level since the early 1980s, the central bank raised its interest rate to a range of 3-3.25 percent, the level higher since the beginning of 2008.
The indicator increased by 0.75 percentage points for the third consecutive time. According to CNBC, the hikes, which began in March from near zero, mark the Fed’s most aggressive tightening of monetary policy since the regulator began using the overnight lending rate as its main policy tool in 1990. The situation can only be compared to that of 1994, when the bank raised the benchmark rate by a total of 2.25 percentage points.
US Federal Reserve Board (FRA) chairman Jerome Powell confirmed the views expressed a month ago at the regular annual meeting of global central bankers in Jackson Hole, Wyoming, CBS reported.
“My main message hasn’t changed since Jackson Hole … the monetary policy committee remains firmly committed to getting inflation down to 2% and we’ll stick with it until the job is done,” the central banker said. at a press conference after the end of the regulator’s two-day meeting.
He added that there is only modest evidence of a cooling of the labor market, indicating a slight decline in job vacancies, the fact that people are leaving jobs at a record pace and wages are rising modestly.
The institute’s new expectations are that the indicator will reach 4.40% by the end of the current year, and then rise to 4.60% in 2023 to fight inflation, Reuters added.
At the same time, the UFR’s quarterly economic forecasts suggest that the US economy will slow to minimum growth in 2022, with a rate that could drop to 0.2 percent at the end of the year and accelerate to 1. 2 percent next year. the potential of the world’s largest economy. Unemployment is projected to rise to 3.8 percent in 2022 and 4.4 percent in 2023. Inflation is expected to slowly return to the target level of 2% in 2025.
There are no interest rate cuts until 2024.
Following the announcement of the Federal Reserve’s decision, the dollar rose to a new 20-year high of 111.63 against a basket of other major world currencies. This is an increase of 1.1 percent compared to the previous value of 111.42 points.
The euro, the most important component of the dollar index, fell to a 20-year low of $ 0.9810, or 1.3%.
Against the yen, the dollar strengthened relatively weakly – by 0.5% to 144.41 yen. Market participants are wary of lifting dollar strength given the threat that Japan could step in to raise its currency.
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