The US Federal Reserve announced today, Wednesday, the largest increase in interest rates in nearly 30 years, while raising the reference borrowing rate by 75 basis points in order to counteract rising inflation.

The Fed stated in a statement that inflation remains high in the US markets, which reflects supply and demand imbalances, high energy prices, and pressures on the prices of other basic commodities.

"Russia's invasion of Ukraine is causing enormous human and economic difficulties," he said, noting that "the invasion and related events create additional upward pressure on inflation and affect global economic activity."

The Federal Reserve predicted a slowdown in the economy and an increase in unemployment in the coming months.

The reserve has significantly lowered its expectations for the growth of the economy in the current year, compared to the expectations it had announced 3 months ago.

And according to what the council announced today, Wednesday;

The world's largest economy is expected to grow by 1.7% this year, down by 1.1% from the rate that the council had expected last March.

It should be noted that the US economy achieved a strong growth of 5.7% last year;

After recovering from the Corona pandemic crisis.

This is the third major interest rate hike since the start of the Corona pandemic, and the first rise by 75 basis points since 1994. The Federal Reserve usually prefers to raise interest rates in increments of 25 basis points.

Inflation battle

The big interest rate hike came after recent data showed little progress in the Fed's fight against inflation.

The measure raised the short-term federal funds interest rate to a range between 1.50% and 1.75%, and reserve officials expect the interest rate to rise to 3.4% by the end of this year and to 3.8% in 2023, which is a significant shift from expectations last March that indicated the rate It will rise to 1.9% this year.

The US Federal Reserve confirmed that it is "strongly committed" to bringing inflation back to the 2% target.

Board Chairman Jerome Powell said that inflation is very high, and stressed the Board's determination to stabilize prices and "use the tools at our disposal to bring inflation below 2%."

"No one knows where the economy will go next year," Powell said.

The US market recorded annual inflation last May of 8.6%, the highest level in 41 years, according to data from the US Bureau of Labor Statistics.