Fed announces another three-quarter-point increase in interest rates

theguardian.com:

With the US economy teetering on the edge of a recession and inflation running at a four-decade high, the Federal Reserve announced another three-quarter of a percentage point increase in its benchmark interest rates on Wednesday, the second such increase in just over a month.

In a statement, the Fed said it was “highly attentive to inflation risks”.

“Recent indicators of spending and production have softened. Nonetheless, job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures,” the Fed said.

The central bank added that Russia’s war against Ukraine is “causing tremendous human and economic hardship” as well as “additional upward pressure on inflation” and weighing on global economic activity.

The US central bank is aggressively raising rates at levels unseen since the mid-1990s as it struggles to tamp down soaring prices, which rose by an annual rate of 9.1% in June, the fastest inflation rate since 1981.

The hike raises the Fed’s cost of borrowing to between 2.25% and 2.5% and is the Fed’s fourth rate increase this year. It comes as central banks worldwide seek to calm price rises with higher rates. Fed chair Jerome Powell indicated that there would be more outsized increases ahead if inflation is not brought under control.

Powell said he did not believe the US was currently in a recession but that the Fed needed to slow growth in order to control inflation.

“We are not trying to have a recession and we don’t think we have to,” said Powell. “We think there’s a path for us to bring inflation down while sustaining a strong labor market.” But he