FACED WITH STRONG INFLATION, THE FEDERAL RESERVE RAISES INTEREST RATES BY 0.75% AGAIN

A further hike in the Federal Reserve's benchmark interest rate of 0.75% was announced on Wednesday in an effort to combat inflation and slow the rate of price increases.

The Fed has increased interest rates by 0.75% for the fourth consecutive time, making this the sixth increase of the year. By increasing interest rates, the Fed seeks to slow the economy and bring prices back down.

“We think they hike just to get to the end point. We do think they hike by 75. We think they do open the door to a step down in rate hikes beginning in December,” said Michael Gapen, chief U.S. economist at Bank of America.

In early trade on Thursday, the rupee fell 8 paise to 82.88 versus the US dollar as the US Federal Reserve boosted interest rates and maintained its hawkish attitude.

The local unit began at 82.87 versus the dollar on the interbank foreign exchange, then fell further to quote at 82.88, a loss of 8 paise from its previous finish.

Indian stock markets slumped today, mirroring a drop in Asian rivals, as US Federal Reserve Chairman Jerome Powell stated overnight that the US central bank will hike interest rates more aggressively than previously expected, squeezing risk appetite. For the fourth time in a row, the Fed raised interest rates by 75 basis points, increasing the top of its target range to 4%, the highest level since 2008.

As the Federal Reserve raises interest rates, the economy begins to stall. The housing market is in a recession, with some mortgage rates virtually doubling. According to Freddie Mac, the 30-year fixed rate mortgage stood at 7.08% in the week of Oct. 28, up from 3.85% in March.