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The US Federal Reserve on Wednesday announced the biggest interest rate hike in more than two decades at 0.5 per cent as it strengthens its fight against rapidly rising prices.
The increase of 0.5 percent comes after a smaller increase in March by 0.25 percent.
US Federal Reserve Chairman Jerome Powell says it is “essential” that US inflation be reduced.
“The economy and the country have gone through a lot in the last two years. “It is essential that we reduce inflation if we are to have a stable period of strong labor market conditions that benefit everyone.”
But with US inflation at its highest level in four decades, further increases are expected. The increase marks the latest attempt to control the high costs felt by households around the world.
The Bank of India on Wednesday announced a sharp rise in its key interest rate, while the Bank of Australia recently approved its first interest rate hike in more than a decade.
By raising rates, banks will make borrowing more expensive for people, businesses and governments.
They expect this to bring demand for goods and services, helping to ease price inflation.
But their actions also risk causing a sharp economic slowdown, especially when new challenges emerge, such as the war in Ukraine and the recent Covid closures in China.
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