The Federal Reserve raises interest rates by 0.25 percentage points

The Federal Reserve raised US interest rates by 0.25 percentage points. Although the increase was expected, it is less robust than it has been in recent times. At the end of last year, interest rates rose by half a percentage point.

The previous four times the interest rate rose by 0.75 percentage points. According to the US central bank, the fact that things are slowing down now is that inflation is calming down somewhat. But it’s still high, so interest rates should continue to rise for a while.

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It is not yet clear how many rate hikes are still to come. However, the Fed’s central bankers are talking about “continued increases.” It will continue until interest rates slow the economy enough to move inflation toward the 2 per cent target.

The US interest rate is now in the range of 4.5 percent to 4.75 percent. Financial markets now assume a maximum interest rate of approximately 5 percent. This is roughly in line with expectations expressed by the Fed itself in December, when policymakers said interest rates would rise to 5 percent or higher this year.