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- The United States Federal Reserve (US Fed), has increased its interest rates by 75 basis points or 0.75%.
- After the announcement by the US Fed, it became a hot topic of discussion about the coming recession.
- The US Fed marks its back-to-back rate hike since 1994.
What the US Fed Committee Said?
As per the rate-setting Federal Open Market Committee (FOMC), policy rate ranges between 2.25 and 2.50% in a consent vote. According to the committee, “Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures.”
As per the US Fed Chair, Jerome Powell,
“The labour market is tight, and inflation is much too high. Against this backdrop, today the FOMC raised its policy interest rate by ¾% point and anticipates that ongoing increases in the target range for the federal funds rate will be appropriate.”
He further added that,
“The high inflation imposes significant hardship, especially on those least able to meet the higher costs of essentials like food, housing, and transportation. We are attentive to the risks high inflation poses to both sides of our mandate, and we committed to returning inflation to our 2% objectives.”
Powell also said, that
“As the stance of monetary policy tightens further, it likely will become appropriate to slow the pace of increases while we assess how our cumulative policy adjustments are affecting the economy and inflation.”
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Estimated Price Analysis By The US Fed Members
As per the fellow members of the Fed, their estimated benchmark rate is 1.5% higher. As they have expected 3.4% by the end of 2022. Additionally, the Fed also cutted their approach for economic growth in 2022. That predicted a 1.7% gain in GDP, down from 2.8% in March.
As per the report of Bloomberg, “The economy may increase enough to avert two straight quarters of economic contraction, a common rule-of-thumb definition for recession, but predictions alter .”
Last month’s interest rate hike by the Fed was 75 basis points, which was the biggest hike in 40 years. This hints at a slowing economy and inflation.
Concluding to this blog, it must noted that the rate hike will be for curbing consumers’ demands. But it will somehow form a technical recession. And also affect the US economy for a second successive quarter this year.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
