The Federal Reserve pumped up its benchmark interest rate Wednesday by three-quarters of a point for a fourth straight time but hinted that it could soon reduce the size of its rate hikes.
The Fed’s move raised its key short-term rate to a range of 3.75 per cent to 4 per cent, its highest level in 15 years. It was the central bank’s sixth rate hike this year — a streak that has made mortgages and other consumer and business loans increasingly expensive and heightened the risk of a recession.
The persistence of inflated prices and higher borrowing costs has undercut the ability of Democrats to campaign on the robust health of the job market as they try to maintain control of Congress. Republican candidates have hammered Democrats on the punishing impact of inflation in the run-up to the midterm elections that will end Tuesday.
The Fed’s statement Wednesday (Thursday morning NZ Time) was released after its latest policy meeting. Many economists expect chairman Jerome Powell to signal at a news conference that the Fed’s next expected rate hike in December may be only a half-point rather than three-quarters.
