Voice of America
27 Jan 2022, 04:05 GMT+10
WASHINGTON - The U.S. central bank signaled Wednesday that it planned to start raising its benchmark interest rate as soon as March and curb its direct financial support for the pandemic-hit American economy.
The Federal Reserve has kept its key interest rate near 0% since the coronavirus swept into the United States in March 2020, which helped fuel faster-than-expected economic growth and curtailed unemployment.
In December, however, consumer prices rose 7% year over year, the biggest such surge in four decades.
Fed policymakers, after a two-day meeting in Washington, did not say how big an interest rate increase might be, but financial analysts have presumed it might be a quarter of a percentage point, with perhaps three more such increases to follow throughout 2022.
The Fed's increased interest rate would almost assuredly course through the U.S. economy, the world's largest. Over time, it would force consumers to pay higher borrowing costs for such big-ticket purchases as houses and cars while businesses would pay more to finance machinery and goods for their operations.
The Fed had already been slowing a bond-buying program it was using to boost the economy. It opted to leave that program in place but to end it in March as planned. The policymakers signaled that they could begin to trim their balance sheet of government-backed debt soon after they begin to raise interest rates, another action that would curtail its direct support for the economy.
The Fed's goal in raising its benchmark rate is to curb consumer demand and, correspondingly, curtail inflation, which has squeezed the household budgets of millions of American families, especially because of higher food prices and higher gasoline costs at service station pumps.
The Fed's policies during the nearly two-year pandemic in the U.S. helped push the unemployment rate down to 3.9% in December, not far above the five-decade low of 3.5% recorded before the coronavirus swept into the country. At its peak, in April 2020, the jobless rate was 14.7%.
But the prospect of higher interest rates in 2022, even though predicted for months, has frightened investors throughout January, with one broad U.S. stock index, the S&P 500, plunging about 8% from a record high at the beginning of the month.
In the hour after the Fed's announcement, the three major U.S. stock indexes all fell marginally.
Get a daily dose of Russia Herald news through our daily email, its complimentary and keeps you fully up to date with world and business news as well.
Publish news of your business, community or sports group, personnel appointments, major event and more by submitting a news release to Russia Herald.
More InformationBASTROP, Texas: In a surprising turn at Elon Musk's X platform, CEO Linda Yaccarino announced she is stepping down, just months after...
NEW YORK CITY, New York: Former British prime minister Rishi Sunak will return to Goldman Sachs in an advisory role, the Wall Street...
LONDON, U.K.: Physically backed gold exchange-traded funds recorded their most significant semi-annual inflow since the first half...
AMSTERDAM, Netherlands: Some 32 percent of global semiconductor production could face climate change-related copper supply disruptions...
NEW YORK, New York - U.S. stocks rebounded Tuesday with all the major indices gaining ground. Markets in the UK, Europe and Canada...
NEW YORK CITY, New York: Financial markets kicked off the week on a cautious note as President Donald Trump rolled out a fresh round...
NEW YORK CITY, New York: With just weeks to spare before a potential government default, U.S. lawmakers passed a sweeping tax and spending...
Chennai (Tamil Nadu) [India], July 11 (ANI): National Security Advisor Ajit Doval on Friday slammed foreign media for their reportage...
Islamabad [Pakistan], July 11 (ANI): Pakistan's poverty crisis continues to spiral out of control, with the World Bank's 2025 assessment...
New Delhi [India], July 11 (ANI): New Pakistan white-ball coach Mike Hesson has revealed the steps that experienced duo Babar Azam...
Britain and France unveiled a sweeping set of agreements on nuclear deterrence and migration control cooperation. by Xinhua Writers...
South Waziristan [Pakistan], July 11 (ANI): In an act of resistance, a grand jirga of the Mehsud tribe in Upper South Waziristan has...