◀ anchor ▶
The Federal Reserve, the central bank of the United States, raised its key interest rate by 0.5 percentage point today.
◀ anchor ▶
It is the first time in 22 years that 0.5 percentage points have been raised at a time.
Let’s connect Washington.
Correspondent Sujin Kim, as expected, the US Federal Reserve has begun aggressive rate hikes.
◀ reporter ▶
yes. After the two-day regular meeting of the Open Market Committee, the Fed announced today that it would raise its benchmark interest rate by 50 basis points, or 0.5 percentage points.
Usually, it was raised by 0.25%p, but the so-called Big Step 0.5%p was raised.
As a result, the US benchmark interest rate range, from 0.25 to 0.5%, has risen from 0.75 to 1%.
The reason for the rise in interest rates, as stated by Chairman Jerome Powell, was inflation, which was the worst rise in 40 years. Let’s hear it for yourself.
[제롬 파월/미국 연방준비제도(the Fed) 의장]
“Inflation is too high. We know the challenges it creates. The Fed is moving quickly to bring inflation down.”
Chairman Powell said the US economy is strong. He said he could make a soft landing and was prepared to face austerity.
However, as the war in Ukraine continues and the coronavirus situation in China worsens again, concerns about inflation remain as supply problems may arise.
◀ anchor ▶
So, you mean not only raising interest rates, but also starting quantitative austerity to recover the liquidity that the market has loosened?
◀ reporter ▶
After the coronavirus pandemic, the Fed bought government bonds and mortgage bonds to stimulate the economy and released a lot of dollars into commercial banks.
These bonds will now come to maturity, and the central bank will no longer hold them and sell them. The money released from the market instead of bonds will then be returned to the central bank vault.
Next month, it plans to sell $30 billion in government bonds and $17.5 billion in mortgage-backed securities, and then increase the amount to $95 billion. This is almost double the rate compared to the time of quantitative tightening in 2017. This is interpreted as an aggressive move by the Fed to stabilize inflation.
◀ anchor ▶
Now the interest is not the next rate hike?
There are also observations that the Fed is about to raise the so-called giant step, 0.75%p.
◀ reporter ▶
Yes, a related question continued at today’s press conference.
Chairman Powell predicted an additional 0.5%p increase at the meeting next month, but responded without actively considering a 0.75%p increase.
[제롬 파월/미국 연방준비제도(the Fed) 의장]
“If inflation is as expected, we will discuss a 0.5 percentage point increase in the next two meetings.”
Even if prices, which peaked last month, stabilize this month, they won’t immediately go back to the 0.25 percent hike they did before. Price stability must be confirmed with certainty.
New York stocks surged after Powell’s comments that saw the possibility of a 0.75 percentage point hike were low.
Next week, the US consumer price index for April will be released, and attention is being paid to whether the inflation trend can be halted.
So far, this is Kim Soo-jin from MBC News from Washington.
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