Biggest increase since 1994!
US Federal Reserve raises interest rates by 0.75 percent
The US Federal Reserve raised interest rates by 0.75 percent. This is the largest increase since 1994.
Published: 8:17 p.m
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Updated: 8:52 p.m
The US Federal Reserve (Fed) has raised interest rates by 0.75 percent. It is now in the range of 1.5 to 1.75 percent. This is the largest increase since 1994. This was announced by Fed President Jerome Powell (69) on Wednesday.
Most analysts had expected a tightening of 0.5 percentage points. However, many observers had also predicted a larger step. A step of 0.75 points was expected on the financial markets.
Fight inflation
The background to the significant tightening is the high level of inflation, which is currently higher than it has been for over 40 years. The central bank had already raised interest rates by 0.5 percentage points in May and by 0.25 percentage points in March.
In the current year, the central bank expects a higher inflation rate than three months ago. Inflation is expected to average 5.2 percent in 2022, despite planned interest rate hikes, up 0.9 percentage points from the previous forecast in March, central bank data showed.
Core inflation is estimated at 4.3 percent
Core inflation, i.e. excluding food and energy prices, is expected to be 4.3 percent this year. The Fed has had to revise its inflation forecasts upwards several times since the beginning of the corona pandemic.
In addition, the Fed expects significantly lower economic growth this year than recently assumed. The gross domestic product (GDP) of the world’s largest economy is expected to grow by 1.7 percent. That would be 1.1 percentage points less than forecast in March. In the previous year, the economy had grown by a strong 5.7 percent as part of the recovery from the Corona crisis. (of)