US Central Bank Expected to Raise Interest Rates
US Central Bank Expected to Raise Interest Rates : The US Federal Reserve is expected to introduce a second major interest rate hike on Wednesday in an effort to combat surging inflation.
Observers say the central bank is likely to announce three-quarters of a percentage point hike in interest rates. The expected rate hike would be similar to last month’s – the biggest increase in nearly three decades when the US inflation rate soared to an annual rate of 8.6%, the highest in 40 years.
The US economy has seen rising demand for goods and services among consumers as the global COVID-19 pandemic continues to ease. However, this also led to an increase in the cost of most commonly used items such as gasoline, food, and clothing, as well as major items such as cars, appliances, and furniture.
The Federal Reserve’s decision to raise the interest rate consumers pay to borrow money is aimed at reducing that demand, which could help lower prices and bring inflation back to the central bank’s target rate of 2% a year — but without too much pressure. and cause a recession that could lead to job losses and other economic pain.
All three major U.S. stock indexes closed lower on Tuesday after retail giant Walmart cut its profit outlook and warned that rising food and gasoline prices are forcing consumers to cut back on higher-priced items such as electronics and clothing.