US interest rates see a 0.75 percentage point rise for the third time to combat inflation.business news

The central bank of the United States has raised interest rates three times in a row.

The Federal Reserve has again raised interest rates by 0.75 percentage points to curb skyrocketing inflation.

of widely anticipated rise For mortgage holders and people paying off credit card debt, it means higher borrowing.

US interest rates have now increased from 2.25% to 2.5% and from 3% to 3.25%. last increase Late July.

This is just one increase in the central bank’s plan to raise interest rates to 4.4% by the end of 2022 and settle to 4.6% in 2023, it announced Thursday. This percentage is his highest since 2007.

The latest hardline stance is being taken to contain a spike in inflation above 9%, the fastest in 40 years in the US. The rise comes as part of an overall plan to bring inflation down to his 2%.

Federal Reserve Chairman Jerome Powell said: “No one knows if this process will lead to a recession or, if so, how deep that recession will be.

As with interest rate announcements, the US central bank, known as the Federal Reserve Board (Fed), outlined its economic forecasts.

Gross domestic product (GDP), a measure of the value created through the production of goods and services, will hit 0.2% this year and 1.2% next year, Powell said, down from previous forecasts.

The U.S. unemployment rate is near a 50-year low, but the Fed described what Mr. Powell described as “softening labor market conditions” as demand for workers outstrips the number of new jobs. Demand for workers will have to decline, he said.

Powell said the U.S. housing market also needs to go through a “correction” to balance demand and supply and return home price growth to a more normal pace. Median home prices have risen about 36% since the pandemic began, despite rising mortgage costs and declining home sales.

The move is likely to bring economic pain, but the Fed expects tougher measures to come sooner and ease tensions. Loan repayment costs will be higher for businesses and unemployment will likely occur as consumers will have less cash available.

Powell said it was “very difficult” to achieve the desired soft landing.

Interest rates were at 0% at the beginning of the year, but the Fed has increased them step by step in five announcements. Low interest rates were reached during the pandemic because the Fed wanted to borrow cheaply to help businesses and consumers survive financially.

Not since the early 1980s has the Fed embarked on a more aggressive monetary tightening campaign.

Wednesday’s rate hike comes after the Fed had already hiked rates in June and July, the first since 1994.

The Federal Reserve is just one of many central banks targeting interest rates as inflationary pressures move the world. Cost of living An economic crisis.

On Thursday, the Bank of England is also expected to raise its base rate by 0.75bps to 2.5%.

It’s been a busy week for central banks as the People’s Bank of China regulator decided to keep rates on hold and the Bank of Japan is expected to keep rates negative.