US makes biggest interest rate rise in almost 30 years

The US central bank has announced its biggest interest rate rise in nearly 30 years as it ramps up its fight to rein in soaring consumer prices, BBC reported.

The Federal Reserve said it would increase its key interest rate by three quarters of a percentage point to a range of 1.5% to 1.75%.

The rise, the third since March, comes after inflation in the US surged unexpectedly last month.

More hikes are expected, adding to the uncertainty facing the economy.

Forecasts released after the meeting showed officials expect the rate the Fed charges banks to borrow could reach 3.4% by the end of the year, the moves rippling out to the public in the form of higher borrowing costs for mortgages, credit cards and other loans.

As central banks around the world take similar steps, it marks a massive change for the global economy, where businesses and households have enjoyed years of low borrowing costs.

“Most advanced economy central banks and some emerging market central banks are tightening policy in sync,” said Gregory Daco, chief economist at strategy consulting firm EY-Parthenon.

“That is a global environment that we’ve not been accustomed to in the past few decades, and that will represent ramifications for the business sector and for consumers throughout the world.”

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