Fed to Hike Interest Rates to 22-Year High in Bid to Tame Inflation

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Fed to Hike Interest Rates to 22-Year High in Bid to Tame Inflation

The US Federal Reserve is expected to hike interest rates by 0.75 percentage points at its meeting on Wednesday, July 27, 2023. This would be the largest rate hike since 1994 and would bring the benchmark federal funds rate to a range of 2.25% to 2.50%.

The Fed’s decision to hike rates comes as inflation continues to run at a 40-year high. In June, the Consumer Price Index rose 8.6% year-over-year, the highest level since December 1981.

The Fed is hoping that by raising interest rates, it will slow the pace of economic growth and bring inflation under control. However, there are concerns that the Fed’s aggressive tightening could lead to a recession.

“The Fed is in a very difficult position,” said Michael Feroli, chief economist at JPMorgan Chase. “They need to raise rates to get inflation under control, but they also don’t want to tip the economy into a recession.”

The Fed’s decision to hike rates is likely to have a number of implications for the economy. For businesses, it will mean higher borrowing costs, which could make it more difficult to invest and grow. For consumers, it will mean higher interest rates on mortgages, car loans, and credit cards.

The Fed’s decision is also likely to have a significant impact on the stock market. Investors are already worried about the possibility of a recession, and a large rate hike could send stocks even lower.

The Fed’s decision to hike rates is a sign that the central bank is serious about tackling inflation. However, it is also a sign that the Fed is facing a difficult challenge. The Fed will need to carefully balance the need to raise rates with the risk of causing a recession.

“The Fed is in a very difficult position,” said Michael Feroli, chief economist at JPMorgan Chase. “They need to raise rates to get inflation under control, but they also don’t want to tip the economy into a recession.”

US Federal Reserve Raises Interest Rate By 0.75 Per Cent; Pledges More Hikes  To Tame Inflation

 

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