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The Fed raises rates again to try to curb inflation

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As expected, the US central bank (Fed) raised its key rates by 75 basis points. More increases are expected in the future.

The US central bank (Fed) announced this Wednesday a fourth consecutive rise in its reference rates, raising them by three quarters of a percentage point to place them between 2.25% and 2.50%, and plans to continue with this movement given the inflation, which is still very high.

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“Recent spending and output indicators have slowed. However, job creation has remained strong in recent months, and the unemployment rate remains low,” the Fed said in a statement issued after the meeting. its monetary committee (FOMC).

This is the fourth rate hike in a row: a quarter point in March, a half point in May and three quarters of a point in June, their biggest hike since 1994.

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The central bank, which usually proceeds with increases of a quarter of a point, hit hard, in an attempt to curb inflation that in June reached a new record in more than 40 years, with 9.1% annual.

unanimous decision

And the monetary committee ensures again to be “very attentive to the risks of inflation.”

The objective of these rate hikes is to make credit more expensive to slow down consumption and investment and, ultimately, relieve pressure on prices.

The decision was made unanimously by the 12 voting members. The Monetary Committee was full, with no vacancies, for the first time since 2013.

Fed Chairman Jerome Powell gives a press conference at 18:30 GMT.

The Fed is hoping for a “soft landing,” but the long-awaited economic slowdown to push prices down could prove too strong, weighing on the labor market and even pushing the world’s largest economy into recession.

The reference rates had been urgently lowered between 0 and 0.25% in March 2020, to sustain the economy in the face of the Covid-19 crisis, and they remained in that range until last March.

Author: LT with AFP
Source: BFM TV

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