US Federal Reserve, European banks raise interest rates -

Washington/London/Brussels: The world’s leading central banks have again announced interest rate hikes, amid signs of a global economic slowdown. The European Central Bank, the Bank of England, and the US Federal Reserve increased interest rates. The Federal Reserve increased by 0.25 per cent, and the United States’ interest rate reached 4.75 per cent. Jerome Powell, head of the Federal Reserve, indicated that the trend of interest rate hikes would continue through the end of March and into 2023. The Federal Reserve’s announcement received a positive response from the stock market. But the dollar index has fallen by more than one percent in currency transactions.

The global economy has witnessed a recession-like environment in the last few months. Many leading organizations, including the International Monetary Fund, the World Bank, the United Nations, the World Trade Organization, and financial sector companies, have predicted a recession in 2023. For this, the increase in interest rates by the world’s major countries is said to be one of the main reasons. The United States, Europe, and other leading countries have consistently supported increased interest rates, citing reasons for curbing inflation. Jerome Powell also justified the interest rate hike by saying that the inflation rate has not yet come down substantially in an announcement by the Federal Reserve on Wednesday.

In many Western countries, including the US, inflation had hit record highs. The rising inflation has hit the common people, and there has been a ‘Cost of Living Crisis’ in many countries. Western countries blamed the Russia-Ukraine conflict and the Covid pandemic for inflation and the following problems. However, many economists and analysts have repeatedly pointed out that the wrong policies of these countries are the cause. However, the US and Western countries have continued to implement interest rate hikes as the only solution.

The Federal Reserve’s announcement on Wednesday marks the eighth interest rate hike in the past year. With this increase, interest rates in the US have reached their highest level since 2007. It is predicted that the American home construction and home loan sector will be affected. At the same time, there have been indications of a decrease in the demand for products in the United States. Although this development shows the recession in the US economy, the Federal Reserve and the Biden administration have consistently denied it.

After the United States, the European Central Bank, the central bank of the European Union, and the Bank of England, the central bank of Britain, have also announced an increase in interest rates. Both central banks have hiked interest rates by half a percentage point (0.5) each.

While announcing the increase, the Bank of England has predicted a strong possibility that the British economy will suffer a recession this year.

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