Is the US interest rate tightening cycle finally over?

In an effort to stamp out inflation in the world’s largest economy, the Federal Reserve raised interest rates by 25 basis points earlier today, extending a tightening cycle that began in March of last year.

The US central bank’s benchmark rate has now been lifted to a range of 5.25-5.5 percent, its highest level in 22 years.

Rates were at near-zero last March. Higher interest rates act as a lever on price growth by choking off economic activity. The impact of the Fed’s action in the past year is starting to show with headline inflation moving closer to the Fed’s 2 percent target, after peaking at more than 9 percent in June 2022. Last month, the consumer price index fell to its lowest level in two years, at 3 percent, down from 4 percent in May.

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