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The Federal Reserve decided to keep its benchmark interest rate unchanged at a range of 5.25% to 5.5%, but emphasized its vigilance towards inflation risks. The central bank’s latest forecasts indicate that the US economy is performing better than expected, suggesting the possibility of another rate hike before the year ends. However, market expectations don’t anticipate any rate cuts until late next year at the earliest.
Similarly, the Bank of England maintained its key interest rate at 5.25%, breaking a streak of 14 consecutive rate increases. This decision followed the release of data showing that the UK’s annual inflation rate unexpectedly dropped to 6.7%. Economists had predicted an increase in inflation due to higher fuel costs, but this was offset by lower prices in certain categories, including food and hotels.
According to the latest projections from the OECD, the impact of higher interest rates is becoming more evident. The organization revised its estimate for global GDP growth this year to 3%, while reducing its forecast for next year to 2.7%. The OECD emphasized the need for monetary policy to remain restrictive until inflation is firmly under control, but also warned that the effects of rate hikes will continue to affect economies for some time.
2023-09-21 07:51:46
Original from www.economist.com
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