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US Federal Reserve raises interest rates significantly

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To combat high inflation, the US Federal Reserve increased the key interest rate by 0.75 percentage points for the third consecutive year. There may be an increase until the end of the year.

In the fight against high inflation, the US Federal Reserve is pushing up the key interest rate with a giant step. It followed Wednesday with a third increase of three-quarters of a percentage point. Thus, the key interest rate will rise to the new range of 3.00 to 3.25 percent.

This new jumbo step was expected in the financial markets. Because the inflation problem in the USA has been more stubborn than expected with a price increase rate of 8.3 percent recently. In their interest rate outlooks, currency watchers also signaled that they would step up their efforts and plan to raise the money price to an average of 4.4 percent by the end of the year.

Interest rate expected to stabilize at 2.5 percent

By the end of next year, the key interest rate will then reach 4.6 percent, which has peaked from market speculation about possible cuts in the second half of 2023.

In the long run, the key interest rate should be fixed at 2.5 percent, according to forecasts of monetary watchdogs. There is a fear that too aggressive moves in the financial markets could stall the economy.

Fed officials expect gross domestic product (GDP) to rise 1.2 percent in 2023. They expect a meager 0.2 percent increase for the current year.

Source: ZDF

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