On Wednesday, the Federal Reserve announced yet another significant increase in interest rates as concerns grow over how much higher borrowing costs will have to rise before strong inflation begins to moderate.
The benchmark interest rate was increased by the central bank by 0.75%. In March, the rate was almost zero; since then, it has increased 3.75 percentage points. Although that is the most aggressive series of rate increases in decades, little has been accomplished in terms of keeping prices in check so far.
According to the preferred yardstick of the Fed, annual inflation in September was 6.2%, remaining constant from the previous month. Even more quickly, at an annual rate of 8.2%, prices are rising according to the more widely known consumer price index.
The rate increase on Wednesday might be the last significant increase for a while. The markets are keeping an eye out for any indication that the Fed intends to reduce its increase at its next meeting in December.
In a statement, Fed policymakers said they believed future rate hikes would be appropriate but added that the speed of those increases would be determined by economic and financial developments.
According to McBride, borrowing costs will probably need to stay high for a while in order to control inflation.