The Federal Reserve raised its benchmark interest rate for the first time since 2023 and signaled that another increase could come before the end of the year. The move strengthens the appeal of dollar-denominated assets and could increase pressure on emerging-market currencies and international borrowing costs.
US inflation cools again, potentially paving way for Fed to cut interest rates soon
Data may bolster Fed’s resolve to hold interest rates steady throughout the spring
More than a year later, price increases at 40-year peaks have come to be anything but, so much so that the Fed this week appears ready to hike interest rates by the most since 1994 to quell them. Biden, meanwhile, is paying the political price for being the face Americans blame for $5 a gallon gas and 10% price increases for eggs.
Markets were reassured after President Joe Biden said he would nominate Jerome Powell for a second four-year term at the helm of the Federal Reserve, a vote of confidence in Powell’s handling of central bank policies during the brutal disruptions caused by the coronavirus pandemic.
The Federal Reserve has stunned the markets by pledging to inject as much money into the economy as needed, and to prop up the credit market too. It’s a massive moment, says AXA’s chief economist Gilles Moec.
