contents
For the first time since December 2018, the US Federal Reserve is raising interest rates to between 0.25 and 0.5 percent. With the turnaround in interest rates, it is bracing itself against ever faster rising prices.
The interest rate turnaround in US monetary policy had been expected, and further interest rate hikes are likely to follow. Fed Chair Jerome Powell had recently clearly signaled a turnaround in interest rates.
The reason: Inflation in the USA reached a 40-year high of 7.9 percent in February. Rising food prices, rising rents and rising petrol prices are a burden for consumers. The US Federal Reserve is counteracting this trend by raising interest rates.
Inflation is a problem for consumers
While inflation in the USA at the end of last year was still considered temporary by many observers, hardly anyone now expects inflation to fall quickly. The war in Ukraine is also likely to further fuel inflation worldwide. At the same time, the conflict increases the risks of market distortions. The rate hike by the US Federal Reserve therefore harbors certain risks.
The Fed last hiked interest rates in December 2018. At the beginning of the corona pandemic in March 2020, the Fed lowered the interest rate target range to 0 to 0.25 percent. The target range for the key interest rate is now 0.25 percentage points higher and thus at 0.25 to 0.5 percent.