Today: Saturday, 2 March 2024 year

The US Federal Reserve raised the base rate to 1.5-1.75% per annum

The US Federal Reserve raised the base rate to 1.5-1.75% per annum

The US Federal Reserve System (FRS) announced a 75 bps increase in the base interest rate. up to 1.5-1.75% per annum follows from the decision published on the regulator’s website.

“Economic activity as a whole seems to be recovering from the decline in the first quarter. The labor market has shown growth over the past months, and the unemployment rate remains low. Inflation remains high, reflecting the imbalance between supply and demand caused by the pandemic, rising energy costs and general pressure on prices,” the Fed said in a statement.

They explained that the difficult situation in the American economy, associated with high inflation, is observed, among other things, due to the influence of Russia’s special military operation in Ukraine on the global economy. The regulator added that they plan to achieve maximum employment and inflation at 2% “in the long term.

On June 10, US Treasury Secretary Janet Yellen acknowledged that anti-Russian sanctions in the energy sector had an impact on inflation in the United States, in particular on the cost of gasoline, TASS reported.

“The ban on Russian oil insurance could have had an impact,” she said, commenting on the reasons for high inflation in the country.

The minister also added that prices in the United States began to rise even before the start of a special operation in Ukraine as part of the market recovery after the pandemic.

The last time the Fed raised the base interest rate in early May – immediately by 0.5 percentage points (p.p.) to 0.75-1%. Such a rate increase was built into market expectations – this followed from the comments of Fed Chairman Jerome Powell and other representatives of the American regulator. Before that, in March, for the first time since 2018, the regulator raised the rate by 0.25 percentage points to 0.25-0.5% per annum. March inflation in the United States hit a 40-year high of 8.5% on an annualized basis, while energy and food prices remain at a consistently high level amid the conflict in Ukraine and sanctions against Russia.