US Federal Reserve unleashes another big rate hike

WASHINGTON (AP) — The Federal Reserve pumped up its benchmark interest rate Wednesday by three-quarters of a point for a fourth straight time to fight high inflation, but hinted that it could soon reduce the size of its rate hikes.

The Fed's move raised its key short-term rate to a range of 3.75 per cent to 4 per cent, its highest level in 15 years. It was the central bank's sixth rate hike this year — a streak that has made mortgages and other consumer and business loans increasingly expensive and heightened the risk of a recession.

In a statement after its latest policy meeting, the Fed suggested that it might soon shift to a more deliberate pace of rate increases. It said that in coming months it would consider the cumulative impact of its large rate hikes on the economy. It noted that its rate hikes take time to fully affect growth and inflation.

Those words indicated that the Fed's policymakers may think that borrowing costs are getting high enough to slow the economy and potentially reduce inflation. If so, that would suggest that they might not need to raise rates as quickly as they have been doing.

For now, though, the persistence of inflated prices and higher borrowing costs keeps pressuring American households and has undercut the ability of Democrats to campaign on the health of the job market as they try to keep control of Congress.

Republican candidates have hammered Democrats on the punishing impact of inflation in the run-up to the midterm elections that will end Tuesday.

Outside the United States, many other major central banks are also rapidly raising rates to try to cool inflation levels that are even higher than in the US.

Last week, the European Central Bank announced its second consecutive jumbo rate hike, increasing rates at the fastest pace in the euro currency's history to try to curb inflation that soared to a record 10.7 per cent last month.

Likewise, the Bank of England is expected to raise rates Thursday to try to ease consumer prices, which have risen at their fastest pace in 40 years, to 10.1 per cent in September.

Even as they raise rates to combat inflation, both Europe and the UK appear to be sliding toward recession.

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