US Fed gives consumers, businesses cheer with lower 0.5% rate hike – UAE, GCC central banks set to match

US Fed gives consumers, businesses cheer with lower 0.5% rate hike – UAE, GCC central banks set to match

The Federal Reserve reinforced its inflation fight on Wednesday by raising its key interest rate for the seventh time this year and signaling more hikes to come. But the Fed announced a smaller hike than it had in its past four meetings at a time when inflation is showing signs of easing. The Fed boosted its benchmark rate a half-point to a range of 4.25 per cent to 4.5 per cent, its highest level in 15 years. Though lower than its previous three-quarter-point hikes, the latest move will further heighten the costs of many consumer and business loans and the risk of a recession. The policymakers also forecast that their key short-term rate will reach a range of 5 per cent to 5.25 per cent by the end of 2023. That suggests that the Fed is prepared to raise its benchmark rate by an additional three-quarters of a point and leave it there until the end of next year. Some economists had expected that they would project only an additional half-point increase. The latest rate hike was announced one day after an encouraging report showed that inflation in the United States slowed in November for a fifth straight month. The