With their move, the central bankers are responding to persistently high inflation.
(Photo: Reuters)
new York The US Federal Reserve (Fed) is staying the course. As planned, it increased the key interest rate on Wednesday by a quarter of a percentage point to a range of 5.0 to 5.25 percent. This means that the key interest rate is higher than it has been for 16 years.
However, the central bankers around Fed Chair Jerome Powell have indicated an interest rate pause for the upcoming meeting in the summer. They would evaluate whether further rate hikes “will be appropriate,” according to a statement. Markets initially reacted little to the news, which was largely expected.
The Fed has been raising interest rates at a record pace since last March to fight inflation. Central bankers warned on Wednesday that inflation remains high. “The US banking system is robust and resilient,” the Fed clarified. Therefore, the rate hike is justified.
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