A number of further rate hikes on the horizon.
(Photo: dpa)
new York The US Federal Reserve (Fed) is speeding up its fight against inflation. It raised the key interest rate by 0.5 percentage points on Wednesday, to a range of 0.75 to 1.0 percent.
It is the first hike of this magnitude since 2000 and the second rate hike in a row. In March, the Fed initiated the turnaround in interest rates with an increase of 0.25 percentage points.
The Fed also published details of the planned reduction in total assets. It no longer wants to completely replace expiring bonds from its portfolio. First of all, the balance sheet total is to be reduced by 47.5 billion dollars starting in June. From September, mining is expected to be $95 billion a month.
The balance sheet had swelled to around nine trillion dollars in the wake of the pandemic – a new record.
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“We pay very close attention to inflation risks,” the Fed said (read the original statement here). The central bankers, who unanimously decided to raise interest rates, are concerned about developments in China. The new pandemic-related lockdowns “are likely to further accelerate supply chain problems.”
US Treasury Secretary Janet Yellen stressed on Wednesday that the US economy is strong, even if economic growth slowed in the first quarter. However, she also worries about high inflation, she admitted. “We face great uncertainties. The risks on a global level are very high.”
The US economy is particularly at risk from the consequences of the Ukraine war. If Europe does without energy from Russia, this could also lead to significantly higher prices for oil, gas and other raw materials in the USA.
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