Federal Reserve approves third consecutive 75 bp hike in response to US inflation

The Federal Reserve has delivered its bluntest reckoning yet, on Wednesday – a decision of what it has called a necessary step to tame the painfully aggressive inflation in the US. Fed has gone big with its third consecutive 75 base points hike. Fed has called the painful inflation to be identified with “slower growth, higher unemployment and potentially a recession”.

Federal Reserve Chairperson Jerome Powell acknowledged at a news conference what has been already accepted by many economists – “That the Fed’s goal of engineering a “soft landing” — in which it would manage to slow growth enough to curb inflation but not so much as to cause a recession — looks increasingly unlikely”.

Keep Reading

“No one knows whether this process will lead to a recession or, if so, how significant that recession would be,” Powell said. The huge third consecutive hike by Fed takes the central bank’s lending rate to a new target range of 3 per cent – 3.25 per cent. This is the highest funds rate of Fed has been since the 2008 global financial crisis. “We have got to get inflation behind us,” Powell said. “I wish there were a painless way to do that. There isn’t.”

The Fed’s updated Summary of Economic Projections that was released on Wednesday underlines: “The quarterly report showed a less optimistic outlook for economic growth and the labor market, with the median unemployment rate inching up to 4.4 per cent in 2023, higher than the 3.9 per cent Fed officials projected in June and substantially higher than the current rate of 3.7 per cent.”

By increasing the borrowing rate, Federal Reserve has made taking out mortgage or business or auto loan even costlier. This will mean that businesses and consumers are going to spend and borrow less as compared to the usual trend, thereby cooling down the economy and slowing the inflation.

Victoria Hudson

Recent Posts

Global Investment Outlook 2024: Analyzing Prime Investment Destinations

When dealing with the 2024 economic environment, it is possible to identify the countries that should attract investors. Advancement in… Read More

November 12, 2024

UNICEF Warns: Toxic Smog in Punjab Puts Millions of Children at Risk

As smog continues to blanket Punjab province I am deeply worried about young children breathing in toxic air. Over 11… Read More

November 12, 2024

Top 3 education jobs that pay higher than a teacher

Teachers in the United States salaries are one of the lowest paid in the world and many people will avoid… Read More

November 11, 2024

Anaya Bangar on Transitioning, Cricket, and the Challenges of Being a Trans Athlete

Anaya Bangar who is 23-year-old daughter of former Indian cricketer and coach Sanjay Bangar recently came out as a transwoman.… Read More

November 11, 2024

SpaceX to Launch 24 Starlink Satellites Today: Falcon 9 Mission Set for 4:02 p.m. ET

Today, November 11, SpaceX is set to launch 24 Starlink satellites from Florida's Cape Canaveral Space Force Station. The mission… Read More

November 11, 2024

UAE and Kuwait Unite for Gulf Stability and Development in High-Level Talks

UAE President His Highness Sheikh Mohamed bin Zayed Al Nahyan was on a state visit to Kuwait. He met with… Read More

November 11, 2024

This website uses cookies.

Read More