US Federal Reserve Raising Rates To Highest In 16 Years
By Stefan J. Bos, Chief International Correspondent Worthy News
WASHINGTON (Worthy News) – The U.S. central bank has raised interest rates to the highest level in 16 years as it battles to stabilize prices amid mounting inflation.
The Federal Reserve’s latest move, which raised its benchmark rate to roughly 5.1 percent, was due to further increase in borrowing costs.
It increased its key interest rate by 0.25 percentage points – the Fed’s 10th hike in 14 months.
The Fed suggested that Wednesday’s rise might be its last one for the short term. “We’re no longer saying that we anticipate” additional interest rate increases, Federal Reserve chair Jerome Powell said, calling it a “significant change.”
However, he refused to rule out further action later, saying: “We’ll be driven by incoming data.”
Wednesday’s interest hike comes at a sensitive moment for the world’s largest economy as high-interest rates combined with high prices and slowing growth seem to spell an economic downtown, analysts said.
The surge in rates also contributed to the collapse of three large banks in the United States this year and turmoil in the banking industry.
All three failed banks had bought long-term bonds that paid low rates and then rapidly lost value as the Fed sent rates higher.
The banking upheaval might have played a role in the Fed’s decision Wednesday to consider a pause for now, analysts said.
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