The US central bank raises the key interest rate by 0.5%, in the largest increase in 22 years

The Extra News channel published in breaking news that the US central bank is raising the key interest rate by 50 points, at a rate of 0.5%, in the largest increase in 22 years.

The US Federal Reserve said that inflation remains high, reflecting supply and demand imbalances linked to the Corona epidemic and high energy prices, and added that the Russian attack on Ukraine is causing enormous economic difficulties.

And the US central bank had kept the interest rate and the asset purchase program unchanged, amid expectations of US Fed officials to raise interest rates twice in 2023..

Federal Reserve Chairman Jerome Powell explained that the board agreed that inflation would rise faster and last longer than expected, but stressed that the latest inflation wave would be temporary..

Powell expected the inflation rate to rise to 3% on an annual basis this year, but then it will decline sharply in 2022, while the report of the consumer price index issued last Thursday showed a rise in the pace of inflation to a 13-year high at 5%.

In a more hawkish-than-expected result, the Fed’s vote showed that 11 of 18 officials expect at least two interest rate hikes in 2023, unlike last March when only seven expected one..

The “Market Watch” institution concerned with the global economy stated that seven officials now believe that the first increase will be next year, compared to only four last March..

In this context, Powell’s announcement that Fed members were discussing slowing the board’s bond purchases for the first time showed the board’s direction to tighten its monetary policy..

The Federal Reserve buys $80 billion in Treasuries and $40 billion in mortgage-backed securities each month, along with keeping the benchmark interest rate near zero, in a coordinated effort to keep financial markets stable and support the economy..

Many economists, including former US Treasury Secretary Larry Summers, believe that the Federal Reserve needs to rethink its policy in light of the two massive fiscal stimulus plans approved by Congress since last December..

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