Sunday, June 26, 2022
IndiaUS Federal Reserve Hike Interest Rates on Loans 4 years later

US Federal Reserve Hike Interest Rates on Loans 4 years later

The US Federal Reserve has released the most anticipated stock exchange in the world. It was announced yesterday that it will raise interest rates on loans after 2018.

As the interest rate has been raised by 0.25 points, the interest on the loan will now be 0.50%.

Increase in inflation

Inflation rose sharply after the corona in the United States. Inflation was 7.9%, the same as in the 1970s, and people were in a lot of trouble. All goods and services were forced to spend more money, and prices soared. The interest rate on bank loans was as low as 0.25%, which stimulated inflation.

Increase in interest

It was reported that interest rates on loans may be raised at the Federal Reserve’s monetary policy meeting on March 16 to curb rising inflation. Accordingly, at yesterday’s meeting, the Federal Open Market Committee recommended raising the interest rate on the loan by 0.25 points. Accordingly, the interest rate on loans in the United States has risen from 0.25% to 0.50%.

Interest will rise further

As the Federal Reserve raises interest rates, consumers and companies will be able to raise interest rates on bank loans. According to the Fed, inflation is expected to rise to 4.2% this fiscal, but only 2%. It therefore hinted that interest rates could rise in the next six monetary policy meetings to control inflation.

Moreover, while economic growth was set at 4% due to inflation, it grew by only 2.8% till last December. Thus, interest rates are likely to rise further in the coming months in a bid to boost economic growth.

In an interview yesterday, Federal Reserve Chairman Jerome Powell said, “We cut interest rates to stimulate economic growth during the Great Depression. But it was decided last December that economic growth was slowing and rising inflation could raise interest rates. Accordingly it was planned to raise the interest rate only 3 times a year.

However, due to high inflation, the interest rate may rise 7 times by 2022 to 1.875% and may rise to 2.80% by 2023. The highest interest rate in the United States since 2008. This will increase interest rates on loans, including interest on credit cards, ”he said

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