JAKARTA The United States Central Bank, The Fed, has decided to raise its benchmark interest rate. The decision is considered to have an impact on the recovery of the world economy.
In the US, the decision The Fed will have an impact on buying a home because you have to pay more for the mortgage. Then retail business owners who face more expensive bank loans.
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The impact of the increase in interest rates was also felt by countries outside America. This policy hit shopkeepers in Sri Lanka, farmers in Mozambique and families in poor countries around the world.
The impact abroad ranges from higher borrowing costs to a declining currency value (depreciation).
“This will put pressure on all areas in developing countries,” said Jubilee USA Network Executive Director, Eric LeCompte, quoted from Antara, Friday (6/5/2022).
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The Managing Director of the International Monetary Fund, Kristalina Georgieva, is also concerned about warning the US Central Bank and the central banks of other countries that are raising interest rates to keep an eye on the risk of the impact on the economies of vulnerable developing countries.
For information, the US Central Bank, The Fed, decided to increase the benchmark interest rate by 0.50% to 0.75-1%. The increase in interest rates by half a percentage point is the most aggressive policy by the Fed in suppressing the inflation rate, which has reached its highest level in 40 years.
“Inflation is too high and we understand the difficulties it causes. We’re moving quickly to bring it back down,” said Fed Chair Jerome Powell.
Powell said Americans are burdened by high inflation, especially on low-income people. “We are very committed to restoring price stability,” he said.
Therefore, Powell hopes that this policy will mean reducing the rate of inflation. Meanwhile, the federal funds rate sets how much banks charge each other for short-term loans, but also
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