Fed raises U.S. rates 0.75 percentage point, biggest since 1994

O Federal Reserve central bank of United States, announced it had raised the country’s interest rates by 0.75 percentage point, the highest since 1994 as the country struggles to cope with inflation at its highest level in 40 years.

With the rise, the interest rate North American has moved to the range of 1.5% to 1.75% per year. It is the third consecutive increase in 2022, after the beginning of a cycle of high interest rates.

The movement followed market expectations, which began to bet on this level this week, but diverged from previous signals from the autarchy. The Fed director, Jerome Powell had already stated that interest rates would not be high by that magnitude.

In the minutes of the last meeting of the municipality, in May, the leaders agreed that it would be appropriate raise the interest rate by 0.5 percentage point in the next meetings, in June and July.

Investors started to project a rise of 0.75 pp after a higher inflation data than expected for May, indicating that the inflationary process in the country has not reached a peak. In addition, fears have grown that the US economy will enter a recession in 2023, as a consequence of the current cycle of high interest rates.

*With information from Reuters