The Strategist

US Fed raises benchmark rate to 22-year high

07/27/2023 - 03:30

The US Federal Reserve has resumed hiking the rate. The range is now 5.25–5.5%, which is the highest level in 22 years.

According to a statement on the Fed's website, the US Federal Reserve (Fed) increased its benchmark interest rate by 25 basis points to a range of 5.25-5.5 percent. The base rate is the interest rate at which US commercial banks lend money to one another for brief periods of time. Since the beginning of 2022, the rate has risen 11 times, now reaching its highest point in 22 years.

Investors expect the Fed to give them hints about its plans, writes Bloomberg. According to the agency, inflationary pressures in the United States decreased in June, and some market participants do not anticipate more base rate increases in 2023. 

The Fed will, however, leave itself open to making other decisions, Citigroup economist Veronica Clark acknowledged in a conversation with the agency. "They will definitely proceed cautiously after just a few months of softer inflation data, which won't be enough to convince the Fed that its job is done," Clark noted. In June, Fed Chairman Jerome Powell said that the benchmark rate would rise twice more in 2023.