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The US Federal Reserve, otherwise known as the Federal Reserve, announced on Wednesday a massive rise in interest rates in a bid to combat high inflation.
The Central Bank’s decision to raise the key interest rate by 0.75% is the largest increase since November 1994.
The rise in interest rates comes as inflation, which measures the price of vital commodities such as food and fuel, reached 8.6% in May, the highest rate in 40 years.
Analysts say the rise in inflation was caused by several factors, such as high demand after the pandemic for homes, cars, goods and other services, including global supply chain problems, tight closures in China as a result of the pandemic and Russian aggression in Ukraine, reports VOA.
“The Federal Reserve understands the difficulties that high inflation is causing. We are deeply committed to lowering inflation, and we are acting swiftly to do so. “We have the tools and the determination to restore price stability in the service of American families and businesses.”said Jerome Powell, chairman of the United States Federal Reserve.
The 0.75% interest rate hike exceeds the figure previously suggested by Mr Powell, but he said recent data showed a higher-than-expected inflation rate.
US stock markets reacted positively after the announcement of the Central Bank. Federal Reserve Chairman Jerome Powell told reporters that during the next meeting in July another interest rate hike is expected.
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