US makes biggest interest rate rise in almost 30 years

The US Federal Reserve has announced its biggest rate hike in almost 30 years as it ramps up its fight to contain rising consumer prices.

The Federal Reserve said it would hike interest rates by three-quarters of a percentage point, widening its target range to 1.5% to 1.75% — its highest level since 2019.

The rise, the third since March, comes after inflation rose unexpectedly last month.

Further increases are likely, the bank said.

Forecasts released after the meeting showed officials expect interest rates could reach 3.4% by the end of the year, a development that will translate to higher borrowing costs for mortgages, debt and credit cards among the public .

As central banks around the world take similar moves, it represents a massive shift for the global economy, where businesses and households have benefited from cheap borrowing for years.

“Central banks in most advanced economies and some emerging market central banks are tightening in sync. This is a global environment that we have not become accustomed to in recent decades and will have repercussions for the corporate sector and consumers around the world,” said Gregory Daco, chief economist at strategy consultancy EY-Parthenon.