(The Guardian) Fed raises rates for sixth consecutive time as fight against inflation continues
The Federal Reserve has once again raised interest rates in a bid to lower the United States’ stubbornly high rate of inflation by tightening the ability of businesses and consumers to borrow money.
Inflation has been a major factor in president Joe Biden’s low approval ratings among voters. In the run-up to the central bank’s two-day meeting that concluded today, some Democratic senators had urged its policy setting committee to proceed cautiously or even hold off on another increase, saying rates that are higher than necessary could harm the economy.
Here’s more on the Fed’s decision from The Guardian’s Dominic Rushe: The Federal Reserve stepped up its fight against a 40-year high in US inflation on Wednesday, announcing its fourth consecutive three-quarters of a percentage point hike in interest rates. With the cost of living crisis battering consumers and Joe Biden’s political fortunes, Fed officials have now imposed six rate rises in a row, the sharpest increases in interest rates since the 1980s, when inflation touched 14% and rates rose to nearly 20%.
The Fed’s latest increase brings the federal funds rate – which acts as a benchmark for everything including business loans, credit card and mortgage rates – to between 3.75% and 4% after sitting at 0% for more than a year during the coronavirus pandemic.
The central bank does not expect inflation or interest rates to reach the levels seen in the 80s. Chair Jerome Powell has indicated that the Fed expects rates will reach 4.4% by the end of the year and start coming down until 2024. Fed officials had expected inflation to decline this year. But inflation – which the Fed initially dismissed as “transitory” – remains stubbornly high. In September, the costs of goods and services were 8.2% higher compared to a year ago, well above the Fed’s target inflation rate of 2%.
The Federal Reserve has once again raised interest rates in a bid to lower the United States’ stubbornly high rate of inflation by tightening the ability of businesses and consumers to borrow money.
Inflation has been a major factor in president Joe Biden’s low approval ratings among voters. In the run-up to the central bank’s two-day meeting that concluded today, some Democratic senators had urged its policy setting committee to proceed cautiously or even hold off on another increase, saying rates that are higher than necessary could harm the economy.
Here’s more on the Fed’s decision from The Guardian’s Dominic Rushe: The Federal Reserve stepped up its fight against a 40-year high in US inflation on Wednesday, announcing its fourth consecutive three-quarters of a percentage point hike in interest rates. With the cost of living crisis battering consumers and Joe Biden’s political fortunes, Fed officials have now imposed six rate rises in a row, the sharpest increases in interest rates since the 1980s, when inflation touched 14% and rates rose to nearly 20%.
The Fed’s latest increase brings the federal funds rate – which acts as a benchmark for everything including business loans, credit card and mortgage rates – to between 3.75% and 4% after sitting at 0% for more than a year during the coronavirus pandemic.
The central bank does not expect inflation or interest rates to reach the levels seen in the 80s. Chair Jerome Powell has indicated that the Fed expects rates will reach 4.4% by the end of the year and start coming down until 2024. Fed officials had expected inflation to decline this year. But inflation – which the Fed initially dismissed as “transitory” – remains stubbornly high. In September, the costs of goods and services were 8.2% higher compared to a year ago, well above the Fed’s target inflation rate of 2%.
