The Federal Reserve announced Wednesday it will raise the interest rate by three-quarters of a percentage point, the largest interest rate hike since 1994.
The decision, taken at a two-day meeting that ended Wednesday, was made in hopes of slowing America’s galloping inflation – the worst the country has seen in 40 years.
And that’s not all: US media report the central bank is likely to raise the rate again, hoping to get a handle on the inflation by slowing down the economy.
Inflation rose last month by 8.6 percent, more than analysts expected. The central bank aims to keep inflation around two percent annually, according to CNBC analysts.
The current inflation rate is far above that.
At this point, however, economists are concerned the rate hike might have the effect of stalling the economy, rather than simply slowing it down by excessively dampening demand, which could lead to higher unemployment.
It could also ultimately push the economy into a recession.
