Washington Inflation in the US continues to rise, climbing to its highest level since November 1981. The inflation rate for goods and services rose to 9.1 percent in June, the Labor Department said in Washington on Wednesday.
Economists polled by Reuters and Bloomberg had only expected a rate of 8.8 percent for June. Material bottlenecks and increased energy costs, also as a result of the Ukraine war, are causing strong price pressure in the USA.
In May, inflation had already reached its highest level since December 1981: In the month, the prices for goods and services in the USA rose by 8.6 percent compared to the same month last year.
The data caused strong reactions on the markets: the Dax lost more than 150 points within a few minutes and was two percent lower at 12,645 points. The euro fell below one dollar for the first time since December 2002 and stood at 0.9999 dollars.
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The new data should confirm the central bank’s tighter monetary policy. Helaba expert Ralf Runde says: “There can hardly be any doubt that key interest rates will be increased by 0.75 percentage points this month and that further steps can be expected in the course of the second half of the year.”
At the June meeting, the Federal Reserve had already raised key interest rates more sharply than at any time since 1994. It decided on an increase of 0.75 percentage points to the range of 1.50 to 1.75 percent.
The minutes of the last central bank meeting on June 14th and 15th show that the US central bank intends to continue on the path it has taken of raising interest rates in order to bring inflation under control. 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.
According to the minutes of the meeting, it was confirmed that interest rates would be raised by 0.50 or 0.75 percentage points at the next meeting on July 27. Just a few days ago, Fed members James Bullard and Christopher Waller spoke out in favor of another interest rate hike of three-quarters of a percentage point.
In the follow-up meeting on September 21, according to Waller, interest rates could then be raised a little less sharply, but still more than the usual 25 basis points. An increase of 50 basis points is likely, said the currency watchdog: “After that we can discuss whether we go back to 25 basis points or whether we have to do more if inflation does not fall.”
More: ECB Minutes: Central bankers discussed stronger interest rate hikes in July – inflation expectations are falling