Tokyo (ANTARA) - The United States Central Bank, the Federal Reserve\n(The Fed), raised its benchmark interest rate on Wednesday (16\/9) for\nthe first time since July 2023 in response to an inflation surge\ntriggered by the war in Iran.<\/p>\n
The 0.25 percentage point increase brings the federal funds rate,\nwhich is charged by commercial banks to one another for overnight loans,\nto a new target range of 3.75 to 4 per cent.<\/p>\n
The Federal Open Market Committee (FOMC), which determines the\ncentral bank\u2019s interest rate decisions, unanimously approved the\nhike.<\/p>\n
Out of the 18 FOMC officials providing the latest projections, 12\nsignalled a further quarter-point interest rate hike later this year.\nMeanwhile, four other officials projected two more increases, while the\nremaining two officials expect interest rates to remain at the new\nlevel.<\/p>\n
Since December, the Fed has maintained the target interest rate range\nat 3.50 to 3.75 per cent.<\/p>\n
\u201cEconomic activity is growing at a solid pace. Although uncertainty\nremains high, partly due to geopolitical developments, domestic spending\nremains resilient. Inflation remains high. Today\u2019s policy will support a\nmore timely return of inflation towards the 2 per cent target,\u201d the\ncommittee stated in a joint announcement.<\/p>\n
Inflation in the US has remained above target for more than five\nyears. The FOMC still has two more opportunities to take action this\nyear, with the next meetings scheduled for October and December.<\/p>\n
The Fed\u2019s latest decision could potentially lead to a disagreement\nbetween its chairman, Kevin Warsh, and Trump, who has consistently\ndemanded interest rate cuts in hopes of boosting spending and\nstimulating economic growth.<\/p>\n
The interest rate hike causes borrowing costs for consumers to rise;\nconsequently, mortgages, vehicle loans, and credit cards become more\nexpensive.<\/p>\n
\u201cThe simple fact is that inflation is too high and has been for too\nlong. This summer\u2019s inflation data does not show me that the underlying\ntrend has improved significantly. Price stability is the foundation of\neconomic growth, and I believe we are taking an important step today to\nachieve it,\u201d said Warsh.<\/p>\n
This was the third meeting led by Warsh since he replaced Jerome\nPowell in May. Powell had previously faced repeated pressure from Trump\nto cut US benchmark interest rates.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/the-fed-finally-raises-benchmark-interest-rate-1789617675", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }