Fed intensifies inflation fight

20 JUN,2022 | MEDC


Fed intensifies inflation fight: The US Federal Reserve raised its target interest rate by 75 basis points (bps) to stem a disruptive surge in domestic inflation. It has projected a slowing American economy and rising unemployment in the months ahead. This hike was the single biggest by the US Fed since 1994, and it shows that not much progress has been made in its fight against inflation. This is similar to the stance taken recently by the RBI, wherein borrowing costs are likely to rise, to the detriment of local industry and entrepreneurs. The Fed statement continued to cite the Ukraine war and the China lockdowns as potential sources of local inflation. US Fed Chairman Jerome Powell also said that the Fed’s next meeting, slated for July 26-27, can expect to see a rate hike of another 50 to 75 bps. The effect was felt in India’s equity markets. The Sensex fell 2% to a 52-week low, as investors fled risky assets on fears of global recession.

 

Picture Credit: Google

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