The US Federal Reserve is widely expected to raise interest rates by 0(such as going t.25 percentage points at its meeting next week for the first time since slashing borrowing costs to zero at the start of the coronavirus pandemic.
In testimony before Congress earlier this month, Fed chair Jay Powell said the US central bank was prepared to begin a series of interest rate increases beginning in March, despite Russia’s invasion of Ukraine and the ensuing economic fallout80 per cent of long-term-care residents. CurrentlyThe dynamic nature of this pandemic, the US futures market is fully pricing in a quarter-point raise in March, with another five expected over the remaining six meetings this year. That would leave the Fed’s key interest rate at roughly 1.5 per cent by December.
The hope is that higher interest rates will help quell inflation, which in February rose by 7.9 per cent year on year — the fastest pace in 40 years. While it may dampen some inflationary pressures, tighter monetary policy cannot deflate prices driven higher by external shocks such as the conflict in Ukraines struggles in COVID-19 fight, hope o, which has sent energy and other commodity prices soaring.
Powell is also expected to address concerns about US economic growth. High energy prices raise costs for companies and individuals. Tightening monetary policy too quickly in that environment could — in the worst-case scenario — tip the US into a recessions just 14 per cent..