The US central bank Chief said that it might slow down on raising interest rates as soon as this month. After raising interest rates quickly earlier this year.
Since June, the Federal Reserve has raised interest rates by 0.75 percentage points, which is a lot. They did this to stop inflation when prices go up faster than wages.
The head of the Fed, Jerome Powell, said it “makes sense” to slow down and see how the changes affect things.
Because of what was said, the markets went up.
In the United States, the Dow Jones Industrial Average went up by more than 2%, the S&P 500 went up by 3%, and the Nasdaq went up by 4.41 %. On the other hand, the dollar dropped while other currencies worldwide rose.
As central banks worldwide sharply raise interest rates after years of low borrowing costs to stop prices from increasing, the US is driving this change.
The Fed’s key interest rate has gone from almost zero in March to more than 3.8%, the highest rate since January 2008.
The cost of borrowing money goes up when the government raises interest rates—trying to slow inflation and the demand for expensive things like cars and homes, which is almost as high as in the last 40 years.
Higher loan interest rate in the US have already hurt the housing market, where sales of homes have slowed down a lot.
But most people need a few months to get used to the changes. Analysts have warned that this means the Fed could cause the economy to slow down a lot.
This is because when the economy gets worse, businesses make less money so they can cut jobs.
Mr. Powell said that inflation might go down in the US. Since June, when it was at 9.1%, the inflation rate has gone down. It was 7.7% in October.
But Mr. Powell said that the job market and wage growth are still too good for the bank to feel safe.
US interest rate rises to highest in 14 years
The US central bank has agreed to a sharp rise in interest rates again. Because it wants to stop prices from increasing quickly.
The Federal Reserve said it raised its key interest rate by 0.75 percentage points, making it the highest since early 2008.
The bank hopes that by raising the cost of borrowing, the economy will slow down. And prices won’t go up too quickly.
But people who disagree with the moves worry that they could cause a terrible economic downturn.
The bank’s benchmark lending rate is now between 3.75 and 4 percent, which is the highest range since January 2008.
Jerome Powell, in charge of the Federal Reserve, said that rates would likely go up again. Saying it was “too early” to talk about the bank taking a break.
While many other countries are raising their interest rates to deal with inflation, the US is taking these steps. Energy prices have increased because of several things, including the war in Ukraine.