WASHINGTON: On Wednesday, the US Federal Reserve is likely to announce a half-percentage-point interest rate hike to combat rising inflation, as an increasing number of experts fear the US is on the verge of entering a recession.
Investors believe there is a 99.6% chance of a 50-basis-point rate hike at the Fed's May 3-4 policy meeting, according to the CME Group's Fedwatch tool. This would be the first half-point increase in the federal funds target rate range since 2000, bringing it to 0.75 to 1%.
In the face of rising inflation and accommodative monetary policy, Fed Chair Jerome Powell indicated on April 21 during a panel discussion at the International Monetary Fund and the World Bank's 2022 Spring Meetings that it is reasonable for the Fed to "move a little more swiftly." "Certainly, we make these judgments at meetings, and we will make them meeting by meeting," Powell added, confirming that a 50-basis-point rate hike will be on the table at the May meeting.
His comments come a week after the Labor Department reported that the US consumer price index rose at the quickest annual rate in four decades in March, jumping 8.5 percent from the previous month. This came after a 7.9% year-over-year increase in February.
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