US pauses on tariff hikes –

US pauses on tariff hikes -

The chaos in the banking sector has already led to a monetary crisis.

The US Federal Reserve is unlikely to raise interest rates further in its fight against inflation. Thus, after 10 consecutive interest rate hikes, the central bank seems to be taking a break. However, the big question is how long the hiatus will last.

Most economists expect the central bank to leave interest rates unchanged. At the previous rate cut in May, US interest rates rose by a quarter of a percentage point to a range of 5.00 to 5.25 percent. This is the highest level in sixteen years.

By making debt more expensive, the central bank controls demand in the economy and it must stop raising prices too quickly. Declining demand risks tipping the US economy into recession.

Fed Chairman Jerome Powell indicated during a speech in May that strong central bank intervention is less needed. That’s because the U.S. financial sector is already experiencing so-called monetary tightening as a result of the recent turmoil in the banking industry. As a result, banks have already become more cautious about issuing new loans so that borrowing costs do not have to rise to curb demand.

However, all eyes are on what Powell will say about future interest rate policy. On Tuesday, inflation in the world’s largest economy was reported to have eased to four percent in May. However, core inflation, which excludes volatile energy and food prices, remained stubbornly high at 5.3 percent. So even with the interest rate gap, there’s a good chance the central bank will hint at the possibility of further hikes in July.

See also  Iran wants US $ 1 billion back for nuclear reform ...


Leave a Reply

Your email address will not be published. Required fields are marked *

Back To Top