The Federal Reserve raises its base rate for the third consecutive time this year to 0.75% in its attempt to control inflation

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At the meeting on September 21, Fed Chairman Jerome Powell announced a further increase of 0.75% in interest rates.

Photo: Mark Makela/Getty Images

The Federal Reserve confirmed a new increase of 0.75% in your base interest rate, as part of its strategy to control inflation in the United States. It is the third consecutive increase of that magnitude so far this year.

The base rate rose in a range of 3%-3.25%%, the highest since the beginning of 2008.

The most recent adjustment of the Fed after the meeting on Wednesday, September 21, coincides with the predictions of specialists from Wall Street and it is preceded by other increases of 0.75% announced in the months of July and June. At the May meeting, the central bank raised rates by 0.5% and 0.25% in March.

The announcement comes after the latest report from the US Bureau of Labor Statistics showed that inflation in August stood at 8.3% compared to the previous yearafter reaching 8.5% in July and 9.1% in June, –two of the highest figures in the last 40 years–8.6% in May, 8.3% in April and 8.5% in March.

Every 0.25% increase in the Fed’s benchmark rate translates to an additional $25 a year in interest on $10,000 in debt. Therefore, a 0.75% increase would earn an additional $75 in interest for every $10,000 of debt.

This could translate into higher cost to borrow for fixed-rate mortgages, to buy a car, or even to get a business loan.

Savings accounts and certificates of deposit can have a positive impact with rising rates; however, the increase they could present could be slower than expected.

One of the problems facing the Fed is that the economy is too hot for its liking with a larger workforce, consumption at a healthy pace and high housing prices, according to specialists. The fear of the experts focuses on the fact that the constant rises would lead to the economy cooling down further and leading to a recession.

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