Washington: The Federal Reserve increased the benchmark US interest rate once more on Wednesday and announced additional increases as it combats surging prices. This tough approach has stoked concerns about a recession. The Federal Open Market Committee (FOMC), which sets the Fed’s policy, increased the rate for a third time in a row by 0.75 percentage points, keeping up its aggressive efforts to rein in inflation, which has risen to its highest level in 40 years. The FOMC said it “anticipates that ongoing increases… will be appropriate” as the policy rate rose to 3.0-3.25 percent as a result of the rise. As American families and businesses struggle, rising costs have turned into a political problem for President Joe Biden as he prepares for the legislative midterm elections in early November.
However, the biggest economy in the world contracting would be more harmful to Biden, the reputation of the Fed, and the entire globe. Jerome Powell, the chairman of the Federal Reserve, has made it clear that authorities will continue to take forceful action to cool the economy and prevent a recurrence of the 1970s and early 1980s when US inflation last spiraled out of control. In the 1980s, it required severe measures and a recession to ultimately drive prices down, and the Fed is unwilling to give up its hard-won reputation for battling inflation.
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