The US Federal Reserve has raised interest rates by 0.75 percentage points as it continues to battle the worst outbreak of inflation in 40 years, but is signalling that future increases in borrowing costs could be made in smaller steps to account for the “cumulative tightening of monetary policy” it has enacted so far.The new language in the policy statement on Wednesday took note of the still-evolving impact that the Fed’s rapid pace of rate hikes has set in motion, and a desire to hone in on a level for the federal funds rate “sufficiently restrictive to return inflation to 2 percent over time”.“Ongoing increases in the target range will be appropriate,” the Fed, the United States central bank, said at the end of its latest two-day policy meeting. While not foreclosing any future decision, officials said, “In determining the pace of future increases in the target range, the [Federal Open Market] Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”
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