The Federal Reserve has triggered another interest rate hike – the sixth since March – making mortgages and other loans increasingly expensive while increasing the risk of recession.
The Fed raised its short-term policy rate to a range of 3.75% to 4%, its highest level in 15 years. This is the latest step in the US central bank’s fight against inflation, which hit 6.2% in September.
“Today, the FOMC [Federal Open Market Committee] raised our key interest rate by 75 basis points, and we continue to expect continued increases to be appropriate,” said Jerome Powell, Chairman of the Federal Reserve.
“We are deliberately bringing our policy to a level that will be restrictive enough to bring inflation down to 2%,” he added, while acknowledging that “we still have a way to go.”
As a result, the price of borrowed money will continue to rise in the United States and much of the world.
But in a statement after its last policy meeting, the Fed said it would take into account the cumulative impact of its sharp rate hikes on the economy – indicating its policymakers may think borrowing costs are getting high enough. to eventually slow the economy and reduce inflation.
As the US economy continues to grow, experts say successive interest rate hikes mean it risks falling into recession in 2023.