US Fed Raises Interest Rate by 0.75%P... Giant Step for Two Consecutive Months (2nd Report)

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] The U.S. central bank, the Federal Reserve (Fed), has implemented a so-called 'giant step' by raising the benchmark interest rate by 0.75 percentage points for the second consecutive month.

On the 27th (local time), the Fed announced after the Federal Open Market Committee (FOMC) regular meeting that it would raise the federal funds rate from the previous 1.50?1.75% to 2.25?2.50%, an increase of 0.75 percentage points. This marks consecutive giant steps following June. The decision was made unanimously.

The FOMC stated, "Inflation continues to rise due to supply and demand imbalances related to the pandemic, higher food and energy prices, and broad-based price pressures," adding, "Although recent consumer spending and production indicators have eased, job growth has been strong in recent months and the unemployment rate remains low." It also emphasized, "We are paying very close attention to inflation risks" and "We are strongly committed to bringing inflation back to the 2% target."

With this rate decision, the U.S. benchmark interest rate has become higher than South Korea's (2.25%). This interest rate inversion is the first in about two and a half years since February 2020.

The market is now awaiting the upcoming press conference by Fed Chair Jerome Powell.

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