Today, Wednesday, the US Federal Reserve will increase the pace of its monetary tightening: It is almost certain that the Fed will raise interest rates by half a percentage point to the range of 0.75 to 1.0 percent at its meeting. This is “definitely an option,” as Fed Chair Jerome Powell recently said.
It would be the second rate hike in a row after a smaller 0.25 point hike in March. It would also be the first major interest rate hike since 2000. Two years ago, at the beginning of the corona crisis, the Fed lowered the key interest rate to almost zero percent.
In addition, the Fed is likely to decide to reduce its portfolio of securities, which rose sharply during the crisis. Total assets are expected to decrease by up to $95 billion per month.
The aim is to reduce the high price pressure. Because inflation in the US is high. The already high inflation accelerated further in March. Consumer prices rose 8.5 percent year-on-year. This is the highest inflation rate since 1982. The Fed is targeting a rate of 2 percent over the medium term.
The Australian central bank has already reacted, raising its key interest rate from 0.1 to 0.35 percent yesterday. It was the first increase in a decade.
Source: Nachrichten
