The world’s biggest economy — all of $23 billion — is clearly in strife, battling as it is with the twin imperatives of growth and inflation. On Wednesday, while the Fed ratcheted up the volume in its war against inflation with its fourth straight 75 basis point hike deflating one and all as the interest regime moved to its highest since 2008. President Joe Biden imperiled in the mid-terms is also talking of jobs and the economy.
The Fed raised interest rates for the sixth time this year. The hike will make it more expensive for consumers and businesses to borrow money.
The central bank is boosting rates to curb inflation, which hovers near a 40-year high. But the higher rates risk pushing the economy into a recession. At a news conference, Fed Chair Jerome Powell said the Fed could slow the pace of hikes as soon as next month.
“That time is coming and it may come as soon as the next meeting or the one after that,” Powell said, USA TODAY reported.
But he added the Fed isn’t close to pausing its rate hike campaign and needs to boost rates a good bit more to reach a level that’s “sufficiently restrictive” to lower inflation to the Fed’s two per cent target. The concern, he said, is that inflation could become “entrenched” in the expectations of consumers and businesses and the Fed must move decisively to head off such a dynamic.
America is obsessed with rising unemployment, spiking inflation and weak growth. A CNN POLL showed that as many as 75 per cent believe that the US economy is in recession although last quarter numbers bumped upto 2.6 per cent. The continuous hikes in interest rates to combat surging inflation means that credit card rates rayes are in the stratosphere at 18.7 per cent while mortgage rates a blow out seven per cent.
Talking to Americans on the main street inflation and the economy are key issues as Biden himself focuses on a withering economy. GOP edge over Democrats in the mid-term voting for Congress is a poor 51 per cent to 47 for Democrats for whites only subset. The new CNN Poll also shows that as many as 74 per cent reckon things are going badly in the US while a hefty 51 per cent are concerned over the economy and rising inflation. Across the board, Americans are expected to vote on these issues.