The US Federal Reserve raises the key interest rate by 0.25 percentage points
The US Federal Reserve raised the main interest rate by 25 basis points, to reach a new record, as part of the US bank’s efforts to curb soaring inflation.
The decision of the US Federal Reserve comes in light of several crises, including the collapse of international banks, and the pressures on the US banking system, such as the collapse of the Silicon Valley bank, and the decline in the shares of the Swiss Credit Suisse bank, which showed the weakness of banks in the face of high interest rate increases, as investors pushed towards gold in search of a hedge.
The council said in a statement: “The recent indicators point to modest growth in spending and production, the unemployment rate remained low, and inflation remains high,” adding, “The committee decided to raise the interest rate from 4.75 to 5%”.
The US Federal Reserve indicated in its statement that it may take more decisions to tighten monetary policy, warning at the same time that the recent developments are likely to lead to stricter credit conditions for households and companies, and to affect economic activity, employment and inflation, in reference to the worsening Crisis of banks ravaging global markets.
Earlier, the Fed announced that its board of directors would initially consider some items at that meeting, including a review and determination of the lending and discount rates that should be imposed by the Federal Reserve Banks.
Jerome Powell, Chairman of the Federal Reserve, expected to accelerate the rate hike in its upcoming meetings to curb inflation, which shocked the international markets.
The US economy added new jobs at a strong pace during the month of February, and the US Department of Labor stated on Friday, March 10, that the non-farm payrolls sector rose by 311,000 jobs last February, which came higher than the estimates of the Dow Jones index at 225,000 jobs in February.
In a sign that the labor market remains strong in the US, the unemployment rate rose to 3.6%, above expectations of 3.4%.
