The US Federal Reserve has boosted interest rates to their highest level in 16 years in an effort to stabilize prices.
The Federal Reserve raised its main interest rate by 0.25 percentage point, marking the tenth increase in 14 months.
The steps have substantially increased borrowing costs in the world’s largest economy, causing a downturn in industries such as housing and contributing to the recent bankruptcy of three US banks.
The Fed indicated that Wednesday’s increase may be the final for the time being.
The bank began quickly boosting interest rates last year, when US prices were rising at the highest rate in decades.
The changes have raised the goal range for its benchmark rate up from near zero in March 2022 to 5% to 5.25%.
Central banks around the world, including those in the United Kingdom and Europe, have taken similar steps.
Higher interest rates increase the cost of purchasing a home, borrowing to expand a business, or incurring other debt. Officials expect demand to fall and prices to cool as those costs rise.
Since the Fed launched its campaign, price increases in the United States have begun to moderate.
Inflation, or the rate at which prices rise, was 5% in March, the lowest level in over two years, but still uncomfortably high for the Fed, which is aiming for a 2% rate.
Gregory Daco, chief economist at EY-Parthenon, believes the Fed would be “prudent” to halt now, citing the mounting dangers to the economy as activity slows.
