The US Federal Reserve decided to raise the interest rate by three quarters of a percentage point (75 points), explaining that more increases will be needed to reduce the raging price pressures.
For his part, economic analyst Abdullah Al-Khamis commented toNews 24The US Federal Reserve’s decision to raise interest rates aims to curb the pressures on the economy due to the highest historical inflation rates in 40 years.
He pointed out that there are fears that raising interest rates will cause a recession in the US economy, and that its negative results will be greater than positive.
He explained: “When interest rates rise, there is a slowdown in economic growth, due to the weak consumer spending of money, and their retention in banks in order to benefit from the high return on deposits as a result of the interest rate hike.”
He added: “Inter-bank borrowing rates rise, so the interest rate rises, and the banks compensate consumers for it, thus raising the cost of financing on car loans, homes, and purchases.”
And he indicated Thursday that lower interest rates may boost economic growth, making borrowing cheaper, and there will be an incentive to spend and invest.
He stressed that stock markets often react quickly to changes in interest rates, and the market is affected by them, and some sectors benefit from it and others are harmed.