The Federal Reserve has been deploying its measures to curb inflation and halt the possibility of an upcoming recession. The FED hiked the interest rate by 25 bps in May. While the US inflation numbers fell to 3%, a lower-than-expected number, the Federal Reserve is expected to raise the interest rate by 25 basis points following its meeting on Wednesday.
FED expected to hike interest rates by 25 bps
The Federal Reserve is anticipated to implement another interest rate rise on Wednesday. This will continue its efforts to raise borrowing costs and address inflation following a brief pause in June.
The projected hike is expected to be a quarter-percentage point increase, which would result in the federal funds rate landing between 5.25% and 5.5%. This move could further impact economic activity as borrowing costs for various purchases, such as homes and cars, continue to rise. If enacted, this would be the highest interest rate since 2001. It will also be the 11th increase in approximately a year and a half.
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Reports suggest that this could possibly be the final rate increase in the tightening cycle by the Federal Reserve. The inflation numbers have plummeted from a high of 9.1%. However, they are still above the target rate of 2%. However, the exact decision can only be analyzed after the meeting concludes.