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The US Federal Reserve on Wednesday raised interest rates by a quarter of a percentage point and unveiled an aggressive plan to push borrowing costs to restrictive levels until next year as high inflation concerns and the war in Ukraine outweigh the risks. of the coronavirus pandemic.
The US Federal Reserve forecast the equivalent of a quarter rate hike in its six meetings, which would push the federal funds target rate between 1.75% and 2.00% by the end of 2022.
By the end of next year, the monetary policy rate is projected to be 2.80%, above the 2.40% that officials now think will slow the economy.
However, a slowdown may be coming. Fed analysts lowered their estimate of economic growth for 2022 to 2.8%, from the 4% forecast in December, as they began to analyze the new risks facing the global economy.
“Russia’s invasion of Ukraine is causing tremendous human and economic hardship. The occupation and related events are likely to put additional pressure on inflation and aggravate economic activity.“The Fed said in a statement
The statement marked the end of the Fed’s full battle against the pandemic, as it raised the rate of federal funds and promised continued growth to curb the highest inflation rates in 40 years.
The interest rate path shown in the new projections is tougher than expected, reflecting the Fed’s concern about faster-moving inflation and threatening to become more persistent than expected, jeopardizing the bank’s hopes. central to a slight shift from emergency policies in place to combat the effects of the pandemic.
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