The Federal Reserve (Fed) has delivered another hike in its interest rate on Wednesday, as expected by many traders and experts. Announcing a pump of 75 bps for a straight fourth time, the Fed has also hinted at reducing the size of its rate hikes soon.
According to a report in AP, the Fed’s move has raised its key short-term rate to a range of 3.75 per cent to 4 per cent, which is also reportedly its highest level in last 15 years. This sixth rate hike of the year comes at a time when the mortgages and other business loans for consumers have already been expensive on the backdrop of increasing fear of recession.
Even after another big rate hike, media reports suggest that the Fed has hinted at easing its pace of rate hike. It also reportedly said that in the coming months, it may take into account the cumulative impact of its large rate hikes on the economy as such big rate hikes usually take more time to fully affect growth and inflation.
A report by AP reads, “Those words indicated that the Fed's policymakers may think borrowing costs are getting high enough to possibly slow the economy and reduce inflation. If so, that would suggest that they don't need to raise rates as quickly as they have been doing.”
It also adds that economists at Goldman Sachs expect the Federal Reserve’s policymakers to raise their key rate to nearly 5 per cent by March as Fed itself had predicted this move in its last set of forecasts that were released in September.
The announcement of this rate hike of 75 bps came after the Fed held its latest policy meeting. Some experts also believe that the next expected rate hike would be in December and may just be a half-point increase. However, there is no official confirmation on the same.
