In its battle against high consumer prices, the US Federal Reserve has raised its key interest rate by 0.75 points for the fourth time in a row. That is now in the range of 3.75 to 4.00 percent, the Federal Reserve announced on Wednesday. It is the sixth rate hike this year. So the Fed continues to tighten interest rates and fight inflation, but has indicated smaller rate hikes going forward.
The pressure on the central bank is great because inflation stubbornly remains at a relatively high level. It was the penultimate Fed meeting of the year – another meeting is scheduled for December. Looking ahead to the Nov. 8 congressional election, consumer prices are also a drag on President Joe Biden and his Democrats. In the election, Democrats could lose their already narrow majority in Congress.
Inflation is something people are mainly concerned about
Surveys show that people are mainly concerned about inflation. According to the surveys, many voters see Republicans leading the way when it comes to economic competence. During the election campaign, they denounce the inflation they blame the Democrats for, while also being a result of the Russian war against Ukraine.
Fear the Fed is going too far
At the same time, tighter monetary policy increases the risk that the central bank will slow the economy to such an extent that the labor market and economy will stall. Because when interest rates rise, individuals and the economy have to spend more money on loans – or they borrow less. Growth is slowing down, companies cannot simply pass on higher prices and ideally inflation will fall. However, some fear that the Fed is overdoing it – and sending the world’s largest economy into recession.
The US Federal Reserve has always used the robust labor market as an argument against sliding the economy into a deep recession. Many companies complain about a labor shortage. The economy also grew somewhat faster than expected in the summer. Biden took this as evidence of economic recovery and people’s resilience. The economy had contracted in the first half of the year.
Source: Krone
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
