WASHINGTON (dpa-AFX) – The US Federal Reserve (Fed) will decide on the first interest rate hike since the beginning of the coronavirus pandemic this Wednesday. Experts expect an increase of 0.25 percentage points due to the persistently high inflation rate. The decision will be announced after the Central Bank Council meeting (19.00 CET).
Afterwards (7.30 p.m. CET) Central Bank Chairman Jerome Powell will explain the motives of the Fed and give an outlook on the further course of monetary policy. The key interest rate is currently still in the low range of 0.0 to 0.25 percent. However, analysts expect further interest rate hikes this year and a rapid reduction in the Fed’s balance sheet, which has been swollen as a result of the Corona emergency programs.
Powell said earlier this month he was considering proposing a 0.25 percentage point rate hike. Raising interest rates and cutting Fed-held securities will help curb high inflation, but growth in the world’s largest economy is also likely to suffer.
The Fed is committed to the goals of price stability and full employment and launched massive aid programs during the Corona crisis to support the labor market and the economy. The economy is now booming again, the labor market is developing very positively – but inflation is now forcing the Fed to take countermeasures. The unemployment rate had recently fallen to a low 3.8 percent. Consumer prices, on the other hand, rose by almost 8 percent in February compared to the previous year, the highest value in 40 years./jbz/DP/nas