US central bankers recently announced a determined fight against inflation.
(Photo: Reuters)
Washington The US Federal Reserve (Fed) intends to continue raising interest rates in order to bring inflation under control in the United States. Interest rates could therefore rise for a longer period of time, even if there is a risk that this will slow down the US economy.
This emerges from the minutes of the last central bank meeting on June 14th and 15th, which were published on Wednesday evening (CEST). According to the information, the meeting confirmed that interest rates would be raised by 0.50 or 0.75 percentage points at the next meeting in July. Getting inflation under control is crucial to maintaining the central bank’s credibility. Many participants felt that there was a significant risk of inflation becoming entrenched if the public questioned the Fed’s determination to adjust monetary policy accordingly.
In mid-June, the Fed raised its key interest rate more sharply than it had since 1994, in view of the highest rate of inflation in more than 40 years. It approved an increase of 0.75 percentage points to the new range of 1.50 to 1.75 percent. The currency watchdogs also signaled that further interest rate hikes will follow this year. According to the minutes that have now been published, only Kansas Fed Chair Esther George spoke out against an increase of 0.75 percentage points and favored a smaller rate hike.
The inflation rate in the US for goods and services rose to 8.6 percent in May – the highest level since December 1981. Fed Chair Jerome Powell had stated that there were ways to curb inflation while keeping the labor market intact . But this is challenging. The US Federal Reserve has a dual mandate: to keep inflation at 2 percent and to keep unemployment low.
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