As a continuous effort to brace for rising inflation, the US Federal Reserve has hiked its benchmark interest rate by 75 basis points for the fourth consecutive time.
Recall that it has hiked the benchmark rates by 0.75% in June, July, and September, respectively. The Fed strongly believes that consistently increasing the rates can put consumer prices under control and bring down inflation to 2%. Jerome Powell, the Fed’s Chair, echoed the same sentiments in his Nov. 2 press conference.
Implications of Persistent Hiking of Interest Rate
Through persistent increases in rates, the Fed has continued to make taking loans costly, forcing borrowers to spend less. The interest rate reflects the costs associated with borrowing and saving by bank consumers. For instance, saving rates in many of the leading banks in the US have increased by 0.21% courtesy of the constant hike in Fed interest rates.
The…
