The US Federal Reserve raises rates again by 0.75% – accepting a recession.
Inflation in the US stood at a staggering 9.1 percent in June. It was therefore clear that central bank boss Jérôme Powell would continue to raise interest rates to fight inflation. On Wednesday, the Fed therefore raised the key rate by another 0.75 percent, which is now in a range of 2.25 to 2.5 percent. This makes credit more expensive and inhibits growth.
Whether the Fed’s policies so far have pushed the US into recession will soon become apparent when economic data is released for the second quarter. “GDP in the US is already contracting in the first quarter. If that also happens in the next three months, we speak of a recession,” explains Viennese stock market expert Monika Rosen.
Further increase expected in September
The financial markets expect a further rise in interest rates in September. However, if the US job market numbers are particularly bad, Rosen says it could lead to a reconsideration at Powell. The US is also suffering from high energy prices (albeit lower than in Europe) and is experiencing increases due to disrupted supply chains to China.
In Europe, the ECB will also raise key interest rates even further this year. However, fears of a recession could see a turnaround in the other direction as early as 2023.
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.
