High inflation rate, high interest rates: The US Federal Reserve is leaving the key interest rate at a high level for the time being. Hopes that inflation could ease have recently been dashed.
In view of the stubbornly high inflation in the USA, the Federal Reserve is sticking to its tight line. The monetary authorities left the key interest rate in the range of 5.25 to 5.50 percent. Commercial banks can borrow central bank money at this rate.
Central Bank boss Jerome Powell recently signaled that the high interest rate policy would probably have to continue for longer in order to break the wave of inflation. The central bank of the world’s largest economy has raised its key interest rate by more than five percentage points at a record pace since March 2022 in the fight against inflation. Recently, however, she no longer turned the interest rate screw.
“The economic outlook is uncertain and the Committee continues to monitor inflation risks closely,” the Fed said after its decision.
Interest rate cut not before September?
Inflation in prices in the USA has recently unexpectedly accelerated again: the inflation rate was recently at 3.5 percent, well above the central bank’s target of two percent.
The Fed has not yet gotten the strong price rise under control. Given the sluggish inflation, financial markets do not expect interest rates to be cut before September. Just a few weeks ago there was speculation about June as the likely time for the interest rate turnaround.