US Federal Reserve hikes rates, sees more tightening in search of 'timelier' drop in inflation
The rate increase was announced less than two months before midterm elections that will determine whether Trump's Republicans retain control of Congress for the final two years of his presidency.
The US Federal Reserve unanimously raised its benchmark interest rate by a quarter percentage point to 3.75%-4.00% on Wednesday, marking the first policy shift under new Fed chief Kevin Warsh. This decision, aimed at achieving a "timelier return to the Committee's 2% goal" for inflation, acknowledges persistent price pressures despite President Trump's efforts. The Fed's new projections indicate that 16 of 18 policymakers anticipate at least one more quarter-percentage-point hike by year-end, with the policy rate potentially reaching 4.00%-4.25%.
"Interest rates in the United States should be 1%, or less," Trump said.
The move comes less than two months before midterm elections, where rising gasoline prices and mortgage rates are key voter concerns. Following the announcement, the US dollar strengthened against the euro, and stocks were mostly higher. Inflation is now projected to return to the 2% target by 2029, a year later than previously expected.
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