Federal Reserve decision: Fed raises key interest rate significantly for the third time in a row

Created: 09/21/2022, 20:05

By: Bettina Menzel

US Federal Reserve: On Wednesday (September 21, 2022) the markets had eagerly awaited the interest rate decision by the US Federal Reserve in the evening.

© Imago/Ting Shen

In the fight against high inflation in the USA, the US Federal Reserve again raised interest rates by 0.75 percentage points on Wednesday.

Experts had expected this big jump in interest rates.

Washington, DC - The US Federal Reserve on Wednesday raised interest rates by 0.75 percentage points for the third straight month.

The US interest rate thus reached its highest level in 14 years.

Fed Chair Jerome Powell has repeatedly reiterated his goal is to bring US inflation under control. 

US Federal Reserve under pressure: balancing act between fighting inflation and fears of recession

On Wednesday, the markets eagerly awaited the US Federal Reserve's decision in the evening.

In view of the high inflation, market observers and experts had largely assumed that interest rates would be raised sharply again by 0.75 percentage points.

Even a larger step had not been entirely ruled out.

Due to the sharp rise in consumer prices, the Fed has raised interest rates four times in a row in the past few months.

The US Federal Reserve was under pressure because the inflation rate in the US fell only slightly in August to 8.3 percent compared to the same month last year, and core inflation had even increased.

The core rate of inflation calculates price increases without including commodity groups that often fluctuate sharply, such as energy and food.

The US economy may have already passed the peak of price hikes due to the Fed's quick intervention.

Because in June the inflation rate had risen to 9.1 percent, the highest value in over 40 years.

At the same time, there are concerns that the US Federal Reserve's determined hike in interest rates could trigger a recession in the US.

The European Central Bank (ECB) last increased the key interest rate in the euro area to 1.25 percent on September 8

.