The Federal Reserve approves a new 0.75% increase in interest rates

Washington, DC- The Federal Reserve This Wednesday he announced a new 0.75 point increase in interest rates, the second increase in the past two months, in an effort to rein in hyperinflation.

With this increase, the fourth since the Federal Reserve began raising interest rates in March, the official interest rate for the world’s largest economy is dropping to a range of 2.25 to 2.5%.

In an official statement released after their two-day meeting, the Fed’s Board of Governors reiterated that it expects to implement further rate hikes in the future.

Official interest rates have not seen increases of 0.75 basis points since 1994When the US central bank, under the historic leadership of Alan Greenspan, made a series of price increases in an attempt to prevent a runaway rise in inflation.

At the time, the annual rate of increase in consumer prices was 2.7%, while last June it was 9.1%, something we haven’t seen in 40 years.

“The committee is firmly committed to the goal of bringing inflation back to 2%.”He pointed out that the US central bank always maintains “maximum employment levels”.

In this sense, the office emphasized that despite the fact that some recent spending and production indicators have declined, job creation remains strong.

secondly, The Federal Reserve insisted that it would continue to reduce the US government’s public debt portfolioIt mainly consists of treasury bills and mortgage-backed securities.

Currently, the central bank accumulates nearly $9 trillion in US debt.

As it did in previous months, the Fed will divest $30 billion in Treasuries and $17.5 billion in mortgage-backed securities in August.

Beginning in September, those monthly numbers will rise to $60 billion and $35 billion, respectively, and the process will end when levels deemed “slightly higher” than what the bank considers “abundant reserves” are reached, according to the plan. To reduce the balance published by the Federal Reserve in May.

By raising rates, loans become more expensive, whether they are mortgages, to obtain, or to businesses. This, in turn, makes it more likely that consumers and businesses will spend less, which leads to a slowdown in the economy and inflation.

The increases implemented so far have doubled the average 30-year mortgage rate to 5.5%, and home sales have fallen. The central bank hopes it can slow growth enough to control inflation, but not enough to trigger a recession, a risk many analysts fear will end badly.

Some suggest that the economy is slowing down and possibly shrinking in the first half of the year. As a result, they fear that the Federal Reserve will end up making credit too difficult and causing a recession that could lead to layoffs and increased unemployment.

Meanwhile, rising inflation and recession fears have eroded consumer confidence and created public anxiety about the economy, which is sending mixed signals, with growth slowing but companies adding workers at a solid pace.

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