Federal Reserve hiked interest rates on Wednesday for the first time since the 2020 outbreak of the Covid-19 pandemic and said there could be another six hikes this year if inflation remains high.
This comes at a time when economists warn that if inflation does not begin to subside in response to these initial moves, policymakers will end up raising rates too high, sending the economy into a recession and financial markets into a slump, as per news agency ANI report.
Chairman Jerome Powell said as the Fed raised rates to between a quarter and half percentage point from a previous zero to a quarter percentage point, even though US economic growth was robust with a projected 4.3% this year, 2.2% in 2023 and 2% in 2024, challenges from the Russia-Ukraine crisis might be just as great.
Powell said the Russian-Ukraine conflict also represented multiple downside risks for the United States. The central bank forecast inflation at 4.3% for 2022, versus its typical target of 2 per cent a year.