The current Federal Reserve interest rate is 3% to 3.25%.
The Fed indicated intentions to increase rates by a further 1.25 percentage points before the year is complete, bringing the federal funds rate to 4.25–4.5 percent before 2022 comes to an end, in updated predictions.
The topic of discussion at the recent Fed Meeting was inflation.
A rate increase would be justified, the meeting claims, and there will be a restrictive policy stance.
There were three major rate hikes in this year so far –
Sep 21, 2022 – 3.25%
Jul 27, 2022 – 2.50%
Jun 15, 2022 – 1.75%
In the event of a rate hike, employment and economic growth would be in jeopardy.
Particularly, the unemployment rate could increase more than expected.
It will be difficult to determine if the next rate hike will be slow-paced, like 50 or 75 basis point.
The FED funds rate should be increased and 75 basis points hike as quickly as possible should be made, was the starting point for the meeting as per meeting minutes.
The United States’ monetary policies will undoubtedly have an impact on other countries.
The central banks of other nations may also raise interest rates as a ripple effect.
