The U.S. Federal Reserve (Fed) announced another interest rate hike of 3 points (75 basis points) this morning, raising the federal funds rate from 1.5% to 1.75% to 2.25% to 2.5%. This is the fourth consecutive interest rate increase in this tightening cycle, following a 1-point increase in March, a 2-point increase in May, and a 3-point increase in June.
The U.S. June CPI ( Consumer Price Index ) released earlier this month soared 9.1%, setting a new record for the largest increase in more than 40 years. It is still unclear when inflation will truly slow down.
With the Federal Reserve consecutive interest rate hikes , the U.S. economic growth has begun to slow down, the real estate market is weak, technology companies have reduced hiring, and the number of people applying for unemployment benefits has also increased slightly. However, the inflation rate is still high, and more and more analysts say that if price pressures are to be significantly relieved, the economy may be in recession and the unemployment rate will rise significantly. Bloomberg Economists surveyed this month predicted a 47.5% chance of a recession in the next 12 months, up from 30% in June.
The United States may have fallen into recession in the last quarter. The second quarter GDP of the United States, which will be released in Taipei tonight, may be negative, marking the second consecutive quarter of GDP contraction, in line with the generally accepted definition of a "technical recession." Powell has previously said that failure to restore price stability would be a bigger mistake than pushing the United States into recession.
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