UK Base Rates Rise Again And US Federal Reserve Raises Interest Rates Fo...

UK Base Rates Rise Again And US Federal Reserve Raises Interest Rates For First Time Since 2018

The US Federal Reserve is raising interest rates for the first time since 2018 in an attempt to bring fast-rising prices under control.

The US central bank said it was lifting its benchmark rate by 0.25% and signalled plans for further rate rises in the months.

The Bank of England increased rates for the third time in the last six months to .75%.

The moves come as the economy faces new uncertainty caused by the Ukraine war and coronavirus outbreaks in China.

They are expected to have widespread global repercussions.

By increasing rates, the Fed will make it more expensive for households, businesses and governments to borrow.

It is hoping that will cool demand for goods and services, helping to ease price inflation in the US, which hit a new 40-year high of 7.9% last month.

U.S. and other global stock prices have been falling since the Federal Reserve warned that they would finally slow down their massive monthly bond-buying scheme and begin hiking interest rates – kept artificially low since the 2008 financial crash - in 2022. 

The Fed's aggressive bond-buying scheme literally just ended last week.

Rising interest rates do not necessarily mean falling stock prices, as was the case in previous hikes. 
Consider this simple chart I recently created which shows how the S&P 500 index has reacted to Fed interest rate changes over the last 20 years. 

US stocks ended 2.2% higher on the news.

 

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·        What is the real inflation rate…and what are the consequences of soaring prices for ordinary people?

 

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