The US Federal Reserve raised its target range for the federal funds rate by 75 basis points on Tuesday (local time), bringing it to between 3.00% and 3.25%, in line with market expectations. It was the Fed’s fifth rate increase this year and the third in a row by 75 basis points, the largest series of rate hikes since 1981.
The market expects the Fed to peak at 4.5%
The August consumer price index (CPI) data released on the 13th of this month showed that the inflation situation in the US is still not improving. Market expectations are that US inflation will not fall significantly in the short term and that the Federal Reserve will maintain an aggressive rate hike path to contain inflation. After a 75 basis point increase in September, the cycle is expected to peak in April next year, with the Fed funds rate likely to rise to 4.5 per cent, up from the 4 per cent forecast before the August consumer price index report.
The Fed has raised interest rates by 300 basis points this year
The Fed has raised interest rates five times since March, by a total of 300 basis points, in response to a broad surge in oil, food and other living costs, but inflation has yet to come down significantly.
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Post time: Sep-22-2022