In order to get the rising inflation under control, the Federal Reserve decides in June to raise interest rates the highest since 1994. Now the US monetary authorities are contemplating further steps. Another interest rate hike is in the offing. It could be as early as the end of the month.
The US Federal Reserve wants to take another big interest rate step to combat rampant inflation. According to released minutes from the most recent June meeting, policymakers expect that a 0.5 or 0.75 percentage point hike at the end of July is likely to be appropriate.
At the June meeting, the Fed raised interest rates more than they had since 1994. It decided on an increase of 0.75 percentage points to the range of 1.50 to 1.75 percent. It was the third increase since the beginning of the corona pandemic. Many leaders see a "significant risk" of elevated inflation taking hold should the public doubt the Fed's resolve, according to the minutes. Inflation in the United States surprisingly shot up to 8.6 percent in May - the highest level in more than 40 years.
Federal Reserve Chairman Jerome Powell recently promised further rapid hikes before the US Congress. No order of magnitude is off the table, he said when asked whether interest rates could also be increased by a full percentage point.
The Fed minutes do not explicitly mention the risk of a recession. But most monetary watchdogs conceded that the economic risks are on the downside. In this context, they believe that interest rate hikes could have a greater impact than expected. Recently, investors on the US stock exchanges have been increasingly concerned that aggressive interest rate hikes could stall the economy.
