Federal Reserve Hike Rates by 75 Basis Points

The Federal Open Market Committee (FOMC) decided to raise interest rates by 75 basis points for the second time in a row to reach between 2.25% and 2.5%, as part of the tightening policy approach that the US is pursuing to confront inflation rates that reached their highest levels in more than 40 years.

Inflation in the US in June rose 9.1% on an annual basis, beating estimates of 8.8%. The rate was the fastest to rise since December 1981.

US Federal Reserve Chairman Jerome Powell had said, after the last meeting in June, that the July meeting might decide another significant increase in interest rates, ranging from 0.5% to 0.75%, as part of the bank’s battle to face historical inflation rates, which makes Wednesday’s decision within Market expectations, while he indicated that interest rates may reach between 3% and 3.5% by the end of this year, which means that he has a range to increase up to about 1% during the upcoming meetings until December.

While investors expect the US central bank to continue raising interest rates to a peak around 3.6% by the middle of next year, according to interest rate futures contracts.