By: The costs count
The US Federal Reserve raised interest rates again to contain inflation, despite the turmoil in the financial sector.
Inflation in the United States reached its highest level in 40 years in the past 12 months and the Federal Reserve raised interest rates eight times to contain price increases.
But the policy is depressing the value of bonds on banks’ balance sheets and has been linked to uncertainty in the banking system.
At its last meeting, the Fed was forced to make the difficult choice between focusing on reducing inflation or keeping interest rates stable to avoid market turmoil.
In the end, it agreed to raise interest rates by a quarter of a percentage point.
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