Beautiful Virgin Islands

Monday, Jul 14, 2025

US interest rates set by Federal Reserve rise to their highest since 2007 but the pace of the increase slows

US interest rates set by Federal Reserve rise to their highest since 2007 but the pace of the increase slows

Target interest rates now range from 4.25% to 4.5%, up from the 3.75% to 4% set by the US central bank during the last increase in November. This month's increase of 0.5 percentage points is smaller than the previous four months' 0.75 point increases.
US interest rates are now at their highest since the global financial crisis as the US central bank has again imposed an increase as it seeks to lower inflation.

The Federal Reserve, known as the Fed, has imposed a 0.50 percentage points rise in interest rates.

The widely-expected rise will mean more expensive borrowing for the likes of American mortgage holders and those paying credit card debt.

Following the increase, US interest rates stand at 4.25% to 4.5%, up from 3.75% to 4% since the last increase in November.

In the US, the interest rate is a range, rather than a single percentage - as in the UK - because the Fed is not permitted to set a specific number. A target rate is instead set as a guide for banks to follow.

The increase is less than the four previous hikes of 0.75 percentage points, indicating the Fed is slowing down in its fight against inflation.

It had embarked on the programme of interest rate rises to bring inflation down to its target of 2%.

That pace of rate rises has reduced as inflation in the world's largest economy appears to be slowing. Prices increased 7.1% in the year up to November, the US Department of Labor announced on Tuesday, down from a 40-year high of 9.1% in June.

After announcing the latest rate increase, the Fed was firm that it was not letting up in its campaign of rises.

Speaking after the decision, the chair of the Fed, Jerome Powell, said he expected there would be ongoing increases and a sustained period when the interest rate is kept high.

In response to continuing high inflation, rates are likely to reach 5.1% by the end of next year, he said, a half percentage point higher than projected in September.

It will take time for inflation to be affected by higher interest rates, he warned, adding: "We are seeing the effects on demand in the most interest sensitive sectors of the economy such as housing. It will take time, however, for the full effects of monetary restraint to be realised, especially on inflation."

Despite this, he acknowledged the US economy has "slowed significantly".

He projected GDP growth, a measure of economic output, will be small, just 0.5% this year and next.

The US labour market, however, remains "extremely tight" with the unemployment rate near a 50-year low and job vacancies "still very high", and wage growth elevated.

Mr Powell recognised the pain inflation was causing US households. But it will not reduce to that 2% target for a further two years, he said.

Inflation will be 5.6% this year, 3.1% next year, 2.5% in 2024 before falling to 2.1% in 2025, the Fed forecast.

"We understand that our actions affect communities, families and businesses across the country. Everything we do is in service to our public mission," he said.

A similar decision on interest rates is to be announced by the Bank of England on Thursday. The Bank is also expected to increase the cost of debt in an effort to depress economic activity and rein in inflation.

Central banks had been asked not to increase rates by the United Nations Conference on Trade and Development.

A recession worse than that experienced after the global financial crisis could result from monetary regulators tightening policy and hiking interest rates, it warned.
Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
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
US Imposes New Tariffs on Brazilian Exports Amid Political Tensions
Azerbaijan and Armenia are on the brink of a historic peace deal.
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Weinstein Victim’s Lawyer Says MeToo Movement Still Strong
U.S. Enacts Sweeping Tax and Spending Legislation Amid Trade Policy Shifts
Football Mourns as Diogo Jota and Brother André Silva Laid to Rest in Portugal
×