The Federal Reserve increased the interest rate by 75% points. Federal Reserve representative Jerome Powell explained that he does not think the U.S. is facing a recession. The Fed intends to return to the 2% target.
The United States Federal Reserve has increased its interest rates once again to stand firm in its combat against inflation. The 0.75% point hike leads the borrowing rate to 2.25–2.50%.
The United States Federal Reserve has once again elevated its interest rates by 0.75%. The central bank highlighted the weakening information regarding the economy as the main reason for the increase; its representative explained that it would stand firm to fight against this crescent inflation.
The United States of America is currently facing its worst inflation in decades, as global macroeconomic trends do not look optimistic for many countries across the globe. The U.S. is not the only nation dealing with high inflation; many countries are currently struggling to keep the problem in check.
Jerome Powell, The Federal Reserve Official, said that it doesn’t make sense that the U.S. would be facing such a recession and that he does not think that the U.S. is under a recession. The borrowing rates are now between 2.25% and 2.50%.
Powell also explained that another ramble could happen in September while The central bank highlighted that the recent index of spending and production had diminished.
However, job gains remained strong in recent months, and the unemployment rate has been low. Inflation remains at a high peak, reflecting supply and demand disparities linked to the pandemic, higher food and energy costs, and comprehensive price pressures.
According to The Federal Reserve, there is a focus on getting back to the 2% goal. In the meantime, consumers and markets will have to deal with uncertain times.
Consumers will Have to Deal with the Pressure Generated by the Impact
Meanwhile, consumer costs have skyrocketed this year. The U.S. Consumer Price Index approached 8.55% in March 2022, and this increase got observed across many other regions.
FTX CEO Sam-Bankman Fried has also highlighted that the most prominent reason for the crypto market Crashdown was the interest rate fluctuation. However, the businessman did not criticize the Fed and said, in their defense, that they were having a difficult time. He explained that The Fed is not alone in this action, as other entities with legal authority have done the same thing, including India.
Crypto as a Hedge
Crypto has long been described as a shield to protect economies against inflation. It is the reason why many large entities have invested in those assets. Many entities keep investing in those assets despite the ups and downs the market has faced.
But over the past two years, the narrative has weakened, as crypto and the comprehensive global markets have begun to present a more solid correlation. Some investors have turned away from more volatile assets like crypto as they intend to stay with safer currencies in uncertain times.
By: Jenson Nuñez