The US Federal Reserve continues to raise interest rates

The US Federal Reserve continues to raise interest rates
International3 May ’23 at 22:18Author of the book: AP

The Federal Reserve has again raised US interest rates by a quarter of a percentage point. As a result, the key interest rate in the US is now between 5 and 5.25 percent. But that may have been the last rate hike. US Federal Reserve policymakers say further increases will depend on how the economy develops.

The Federal Reserve has again raised US interest rates by a quarter of a percentage point. As a result, the key interest rate in the US is now between 5 and 5.25 percent. But that may have been the last rate hike. US Federal Reserve policymakers say further increases will depend on how the economy develops. (ANP / AFP)

That comment gives the central bank some leeway to look at what the Fed’s fallout from this week could be. In 2006, the Fed changed its language in a similar way when interest rate hikes ended. But at the same time, inflation is still elevated, the central bank noted. New jobs are still being created, which also indicates a resilient economy.

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However, economic growth was disappointing in the first quarter. Households and businesses are finding it increasingly difficult to access credit, which could have an impact on economic activity, job vacancies and inflation, the central bank said.

Sufficient height

In his comments, Federal Reserve Chairman Jerome Powell said interest rates may now be high enough to restrain the economy. Inflation can be reduced in this way, but it can lead to recession. Powell didn’t think it would come to America. According to the central bank chief, the labor market is still tight. He pointed out that companies are still growing.

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In the coming weeks and months, Fed policymakers will be watching macroeconomic data closely, Powell said. This raises the possibility that the central bank will not announce another rate hike at its next meeting in June. However, investors expect many more increases this year. Interest rates are now at a sixteen-year high. The central bank has raised interest rates in the past ten meetings.

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