Enlarge image
Fed Chair
Jerome Powell
: Fight inflation with higher interest rates
Photo: OLIVIER DOULIERY / AFP
Rapid interest rate hikes in the fight against inflation: Fed Chairman
Jerome Powell
announced the decision on the further interest rate hike by the US Federal Reserve on Wednesday at 2 p.m. local time (8 p.m. CEST).
As expected, the Fed raised interest rates by 0.75 points to between 3 and 3.25 percent.
It is the third increase of 0.75 percent in a row and the fifth increase in key interest rates this year.
Powell has previously repeatedly reiterated that his goal is to bring inflation under control.
In view of the sharp rise in consumer prices, the Fed had raised interest rates four times since the beginning of the year.
Before the latest rate hike, it was between 2.25 and 2.50 percent.
In the United States, inflation rose to 9.1 percent in June, the highest level in more than 40 years.
It fell slightly to 8.5 percent in July and 8.3 percent year-on-year in August.
According to the Fed, however, this is still far too high.
On the stock exchanges, the increase of 0.75 percent was considered priced in.
Dow Jones and Nasdaq increased their profits slightly immediately after the Fed's decision.
In the past few days, the stock exchanges had already given way significantly in anticipation of the interest rate hike.
"More important than the size of the rate hike, however, is when the central bank might end its tightening cycle," said Konstantin Oldenburger, market analyst at CMC Markets.
Investors should have some clues as
the Fed's new economic forecasts are released
at the same time .
The projections will also include the year 2025 for the first time.
Fight inflation by raising interest rates quickly
Since the annual August meeting of the Federal Reserve in Jackson Hole, there has been no doubt that Fed Chair
Jerome Powell
(69) has meanwhile changed direction and is now determined to combat inflation by raising interest rates sharply.
His clear message at this meeting was that the Fed will also accept recession as the price of fighting high inflation.
He is referring to former Fed Chairman
Paul Volcker
, who hit the economy hard with rate hikes in the early 1980s.
"We have to keep at it until the job is done," Powell said, citing the title of Volcker's 2018 autobiography, Keeping At It.
The Swedish central bank had already braced itself against the high inflation with a sharp interest rate hike on Tuesday.
The key interest rate will rise by a full percentage point to 1.75 percent, as announced by the
Reichsbank
in Stockholm.
It's the third rate hike this year.
Analysts had expected a further tightening of monetary policy, but most expected a step of 0.75 percentage points.
Even such an increase would have been a very significant streamlining.
China's central bank kept interest rates unchanged on Tuesday.
The one-year key rate remained at 3.65 percent and the five-year key rate remained at 4.30 percent.
Most loans in China are based on the one-year rate, the key rate for five-year loans affects mortgages.
With an interest rate cut last month, the
People's Bank of China
in Beijing helped the economy weakened by the real estate and corona crises.
The strong rate hikes by the Fed are also giving tailwind to the world's leading currency, the US dollar.
The US dollar is currently heading back towards its recent 20-year high.
la/dpa