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The Federal Reserve said it would increase its key rate by 0. 75 percentage points, targeting a range of 2. 25% to 2. 5%.
But fears are rising the moves will tip the US into recession.
A stronger dollar, driven by The Higher interest rates, is also hitting economies overseas and eroding the profits of US-based international firms.
In many countries, That milestone is considered a recession though it is measured differently in the US.Banks 'don't have a choice'
But with inflation soaring, central banks " don't really have a choice" about whether to act, said economist Pierre-Olivier Gourinchas, director of research at The International Monetary Fund.
Earlier this month, the European Central Bank announced an unexpectedly large rate Rise - its First In 11 years. The Bank of England has been raising rates since December, and dozens of other countries have taken similar steps.
In a statement announcing its decision, the Fed acknowledged That growth in parts of the Economy was slowing, but said it expected " ongoing increases" in interest rates would be " appropriate" in the months ahead.
Wednesday's rate Rise , The Fourth since March, will push the rate the Fed charges banks to borrow to More Than 2. 25%, A Level last seen in 2019, just above where they were in the months before the pandemic hit in 2020.
But businesses and households have grown accustomed to low interest rates, which have rarely risen above 2. 5% since the 2008 financial crisis. And the Fed is also hiking unusually fast.
" This is rapidly proving to be one of The Most aggressive hiking cycles we've seen in recent decades, " said Seema Shah, chief strategist at Principal Global Investors, adding That the Fed is not in a position to shift gears anytime soon.
" Combatting four-decade high inflation will take a sustained show of strength. "
Already, some firms in the tech and housing industries - which saw rapid gains thanks to low borrowing costs - have announced job cuts or plans to slow hiring, citing The Market shiftBusiness 'dropped off a cliff'
Arizona mum-of-three Jessica Duran is one of thousands of workers in the property industry who has lost Her Job in recent weeks.
She says her business working on loans for prospective home buyers in one of America's hottest housing markets " dropped off a cliff" in March, as the US Central Bank started to raise rates.
When her company told her it was cutting Her Job , she wasn't initially worried about finding a new one. But she says dozens of applications and aggressive networking in The Weeks since have led nowhere.
Now she's worried she may be out of work until The Market picks up again - which may not happen for months.
" I feel like I spent two years rejecting job offers and now I'm Out There begging on The Streets , " she says. " I'm concerned about how long The Job market, the housing market is going to stay down. If it continues in this direction, That 's thousands of jobs. "
Analysts say they still think the US can avoid severe economic pain, pointing to a jobs market That is still adding hundreds of thousands of jobs each month. Consumer spending - which accounts for almost 70% of the Economy - has also held up, though growth has slowed.
" We're not there yet, " said Madhavi Bokil of Moody's Investors Service. But She Said , " we do think That if inflation numbers keep Coming In as high as they have been and the Fed has to tighten a lot more aggressively than We Are expecting then The Risk of a recession is high".
" To get it just right so as to cool the Economy but not tip the Economy into recession - That 's a challenging proposition, even in The Most normal times and We Are in a very complicated environment right now, " she added.
Source of news: bbc.com