US Federal Reserve hikes interest rates by 25pbs, hints possible ‎halt ‎

US Federal Reserve announced today, Wednesday, an interest rate hike for the tenth time in nearly a year, and hinted at the possibility of stopping the current monetary tightening cycle.

In today’s much-anticipated official decision, the Federal Open Market Committee raised interest rates by 25 basis points to the range between 5% and 5.25%, the highest level since August 2007.

After this expected decision, the markets will focus on whether or not the Fed will stop at this limit of interest increases, especially amid concerns about economic growth and the banking sector crisis.

In its statement, the Fed stressed that it will take into account the cumulative monetary tightening policy and its impact on economic activity, inflation, and financial and economic developments.

Today’s decision comes in light of the economic fragility afflicting the United States, which prompted lawmakers in the US Congress to demand the Federal Reserve to stop raising interest rates in light of the decline in the pace of employment and the possibility of falling into a recession trap.

Despite Fed officials’ emphasis on the strength of the US banking sector, further monetary tightening in credit conditions and easing regulations will have a greater impact on economic growth, which amounted to only 1.1% in the first quarter of this year.

The Fed raised the interest rate 7 times in 2022, in meetings during the months of March, May, June, July, September, November and December.

The Fed raised interest rates twice, by 25 points each time, in February and March 2023, while 5 more meetings remain throughout the year, and the decision of the next meeting will be on June 14th.