The US Federal Reserve raises the key interest rate again significantly - the jump in interest rates could stall the economy

Created: 07/27/2022, 20:09

By: Richard Strobl, Bettina Menzel

The Federal Reserve (Fed) building in Washington.

© J. Scott Applewhite/AP/dpa

The US Federal Reserve raises interest rates again by 0.75 percentage points.

This is intended to combat inflation - but risks a recession.

Washington - To combat the high rate of inflation, the US Federal Reserve is again raising its key interest rate sharply by 0.75 percentage points.

It is now in the range of 2.25 to 2.5 percent, as the Federal Reserve (Fed) announced on Wednesday.

The US Federal Reserve raises interest rates by 0.75 percentage points

The hike was expected in advance because the central bank had little choice in the current situation.

75.1 percent of market participants had expected an increase of 75 basis points, while 24.9 percent even expected an increase of a full percentage point.

That's according to data from CME Group's Fed Watch Tool.

With the move, the Federal Reserve Bank wants to get the high inflation under control.

The inflation rate had recently reached its highest level in 40 years.

However, the Fed is also taking a high risk.

Because the higher key interest rate is likely to weaken the already weakening economy again.

Now there is a risk that the world's largest economy will slide into recession.

The German share index DAX had increased slightly on the day of the US interest rate decision and rose to 13,166.38 points

.