The US Federal Reserve raised its target interest rate by 0.75 percentage point yesterday to a range of 1.25 per cent to 1.75 per cent to control inflation and forecast an economic slowdown and a rise in unemployment in the next few months. The rate hike was the biggest made by the central bank since 1994. The US dollar index fell by 0.7 per cent to 104.78.

Recent statistics showed little progress in the central bank’s battle against inflation.

The US Federal Reserve raised its target interest rate by 0.75 percentage point yesterday to a range of 1.25 per cent to 1.75 per cent to control inflation and forecast an economic slowdown and a rise in unemployment in the next few months. The rate hike was the biggest made by the central bank since 1994. The US dollar index fell by 0.7 per cent to 104.78.

“Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices and broader price pressures,” the central bank’s Federal Open Market Committee said in a statement after its two-day meeting in Washington, D.C, ended.

“The committee is strongly committed to returning inflation to its 2 per cent objective.” The statement cited the Ukraine war and China’s lockdown policies as the reasons behind the inflation.

The Fed also downgraded its economic outlook, with the economy now seen slowing to a below-trend 1.7 per cent rate of growth this year, unemployment rising to 3.7 per cent by the end of this year, and continuing to rise to 4.1 per cent till 2024.

Fibre2Fashion News Desk (DS)