Beautiful Virgin Islands

Wednesday, Jul 16, 2025

US interest rates increase at their sharpest rate since 1994 in bid to tackle soaring inflation

US interest rates increase at their sharpest rate since 1994 in bid to tackle soaring inflation

"We’re not trying to induce a recession," the Fed chairman said, while warning of more rate rises to come and projecting a slowing economy in the months ahead.
The US central bank has increased interest rates by three-quarters of a percentage point to combat inflation - the sharpest hike in 28 years.

The Federal Reserve signalled more rate rises to come and projected a slowing economy in the months ahead, along with growing unemployment.

This will make it costlier for people, businesses and governments to borrow - affecting credit card and mortgage payments.

The benchmark rate now stands at a range of 1.5% to 1.75%, levels that have not been seen since before the pandemic began.

Fed Chairman Jerome Powell stressed that the US economy was strong enough to handle the hike, saying: "We're not trying to induce a recession."

He had previously ruled out such a high increase but the unexpected spike in inflation last month - which many had hoped had peaked - forced the bank to change course.

Data published on Friday showed the US Consumer Price Index hit a 40-year high of 8.6% in May, one of the highest in the world.

In a statement, the Federal Open Market Committee cited the impact of the war in Ukraine and lockdown policies in China on soaring consumer prices.

Officials raised their forecasts for interest rates at the end of this year and next, expecting the median benchmark rate to climb to 3.4% by the end of 2022.

In March, that rate had been projected at 1.9%.

It is expected to reach 3.8% by the end of 2023, up from the March forecast of 2.8%.

The revision indicates that Fed officials expect inflation to last longer than they had before.

Mr Powell said he did not expect hikes of three-quarters of a percentage point to be "common".

The tightening of monetary policy was accompanied by a downgrade to the Fed's economic outlook, with the economy now seen slowing to a 1.7% rate of growth this year.

Unemployment is expected to increase to 3.7% by the end of 2022, hitting 4.1% in 2024.

Concerns about growing borrowing costs have prompted a sharp sell-off in bonds and stocks by investors, who anticipated Wednesday's interest rate rise.

The S&P 500 entered bear market territory on Monday, having fallen 20% from its peak in January.

Other countries are also hiking interest rates to combat inflation.

In the UK, the Bank of England is expected to increase its rate by 0.25% to 1.25% on Thursday.
Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
Dimon Warns on Fed Independence as Trump Administration Eyes Powell’s Succession
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Jeff Bezos Considers Purchasing Condé Nast as a Wedding Gift
Ghislaine Maxwell Says She’s Ready to Testify Before Congress on Epstein’s Criminal Empire
Bal des Pompiers: A Celebration of Community and Firefighter Culture in France
FBI Chief Kash Patel Denies Resignation Speculations Amid Epstein List Controversy
Air India Pilot’s Mental Health Records Under Scrutiny
Google Secures Windsurf AI Coding Team in $2.4 Billion Licence Deal
Jamie Dimon Warns Europe Is Losing Global Competitiveness and Flags Market Complacency
South African Police Minister Suspended Amid Organised Crime Allegations
Nvidia CEO Claims Chinese Military Reluctance to Use US AI Technology
Hong Kong Advances Digital Asset Strategy to Address Economic Challenges
Australia Rules Out Pre‑commitment of Troops, Reinforces Defence Posture Amid US‑China Tensions
Martha Wells Says Humanity Still Far from True Artificial Intelligence
Nvidia Becomes World’s First Four‑Trillion‑Dollar Company Amid AI Boom
U.S. Resumes Deportations to Third Countries After Supreme Court Ruling
Excavation Begins at Site of Mass Grave for Children at Former Irish Institution
Iranian President Reportedly Injured During Israeli Strike on Secret Facility
EU Delays Retaliatory Tariffs Amid New U.S. Threats on Imports
Trump Defends Attorney General Pam Bondi Amid Epstein Memo Backlash
Renault Shares Drop as CEO Luca de Meo Announces Departure Amid Reports of Move to Kering
Senior Aides for King Charles and Prince Harry Hold Secret Peace Summit
Anti‑Semitism ‘Normalised’ in Middle‑Class Britain, Says Commission Co‑Chair
King Charles Meets David Beckham at Chelsea Flower Show
If the Department is Really About Justice: Ghislaine Maxwell Should Be Freed Now
NYC Candidate Zohran Mamdani’s ‘Antifada’ Remarks Spark National Debate on Political Language and Economic Policy
President Trump Visits Flood-Ravaged Texas, Praises Community Strength and First Responders
From Mystery to Meltdown, Crisis Within the Trump Administration: Epstein Files Ignite A Deepening Rift at the Highest Levels of Government Reveals Chaos, Leaks, and Growing MAGA Backlash
Trump Slams Putin Over War Death Toll, Teases Major Russia Announcement
Reparations argument crushed
Rainmaker CEO Says Cloud Seeding Paused Before Deadly Texas Floods
A 92-year-old woman, who felt she doesn't belong in a nursing home, escaped the death-camp by climbing a gate nearly 8 ft tall
French Journalist Acquitted in Controversial Case Involving Brigitte Macron
Elon Musk’s xAI Targets $200 Billion Valuation in New Fundraising Round
Kraft Heinz Considers Splitting Off Grocery Division Amid Strategic Review
Trump Proposes Supplying Arms to Ukraine Through NATO Allies
EU Proposes New Tax on Large Companies to Boost Budget
Trump Imposes 35% Tariffs on Canadian Imports Amid Trade Tensions
Junior Doctors in the UK Prepare for Five-Day Strike Over Pay Disputes
US Opens First Rare Earth Mine in Over 70 Years in Wyoming
Kurdistan Workers Party Takes Symbolic Step Towards Peace in Northern Iraq
Bitcoin Reaches New Milestone of $116,000
Biden’s Doctor Pleads the Fifth to Avoid Self-Incrimination on President’s Medical Fitness
Grok Chatbot Faces International Backlash for Antisemitic Content
Severe Heatwave Claims 2,300 Lives Across Europe
NVIDIA Achieves Historic Milestone as First Company Valued at $4 Trillion
Declining Beer Consumption Signals Cultural Shift in Germany
Linda Yaccarino Steps Down as CEO of X After Two Years
×