The Federal Reserve in the United States commented that the interest rate is to rise by three quarters. However, the percentage point range is 1.5% to 7.5%. It is due to increasing consumer prices.
The rise was greatly influenced by the inflation the US market saw last month. There are expectations of more hikes. It will also make it more difficult for citizens in the United States.
However, the forecasters are expecting the Fed charges to reach 3.4%. It will be till the end of the year. This will greatly affect the general public. It will also increase mortgages, loans, and credit card interest rates.
Chief Economist at EY-Parthenon, Gregory Daco, also explains, “Most advanced economy central banks and some emerging market central banks are tightening policy in sync, That is a global environment that we’ve not been accustomed to in the past few decades, and that will represent ramifications for the business sector and consumers throughout the world.”
The central banks all around the world are trying to do the same things. It will change the image of the global economy. There will also be no low borrowing cost.
In the year 2009, when the consumer price rose to 9% in April, the Bank of England called out to increase the interest rate by 1%. Australia, Brazil, and Canada also ended up increasing their interest rate. The European Central Bank is going to do the same in the summer end. The US slashed rates were trying to support the economy during the pandemic. Fed rose the interest rate by 0.25 points in March and 0.5 points in May.
The rising interest rates demand to bring the inflation down. Analysts do consider that FED is struggling to catch up. It also dismissed the price range as a sort of temporary problem about supply chain issues during the Pandemic.