The US Federal Reserve is likely to hike interest rates further on Wednesday in the fight against inflation. It would be the tenth consecutive rate hike. Hopefully the US central bank will take a breather and this will be the last hike for now.
The vast majority of economists expect the Fed to raise interest rates again by a quarter of a percentage point. The US interest rate will then be between 5.00 and 5.25%. All attention, however, is on what US Central Bank President Jerome Powell will say about future interest rate policy.
Effect
There’s a good chance the Fed will stop raising interest rates after this rate meeting. Inflation in the US has cooled significantly in recent months due to falling energy prices. There are also growing signs that the world’s largest economy is slowing and could potentially enter a recession later this year. In addition, US consumer confidence fell to its lowest level in nine months.
The Fed policy therefore appears to be taking effect. By making loans more expensive, the central bank tries to curb demand in the economy and thus curb inflation. As interest rates have risen sharply in a short period of time, some regional banks have also run into problems. Earlier this week, First Republic Bank went bankrupt. The bank was seized by US regulators, after which all funds and most of its assets were resold to JPMorgan Chase. Silicon Valley Bank and Signature Bank already collapsed in March.
Source: BNR
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.
