US Fed hikes rate by 25bps amid recession threat; Powell says no rate-cut this year

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US Fed hikes rate by 25bps amid recession threat; Powell says no rate-cut this year

Amid conflicting narratives on whether the US economy could avert a hard-landing following an impending recession, the US Federal Reserve stayed on its hawkish rate-hike path and had increased its benchmark borrowing cost by 25bps (basis percentage point) on Wednesday night following a year-long aggressive rate-hike cycle, while the Fed Chair Powell had said that no rate-cuts would take place this year, eventually adding to further woes on an inflation-sickened US economy which has been set to be defaulted on debts as early as by this Summer as cited by the US Treasury Secretary Janet Yellen.

In factually, earlier this week, the US Fed had said following its January 31-February 1 policy meet that the US Central Bank might just have turned a key corner, but possibilities of a hard landing are still looming large on the horizon, as the Fed Chair Powell was quoted saying following the policy meet that the US Central Bank would require a couple rate-hikes more this year to tame a tattering inflation-surge.

US Fed hikes rate by 25 bps

Adding further holocaust to US economy, consumer spending of which had been slowed to a nearly 2-1/2-year-low last month, the US Fed had said that the US Central Bank’s overnight lending rate would remain elevated this year as beforementioned adding it would require more evidences of a decline in inflation in order to start trimming the interest rates.

The US Fed policymakers also had forecasted an ongoing surge in borrowing cost despite a gruelling upsurge in inflation, as a wide array of businesses across the US ranging from small-scale restaurants to blue-whale corporates are pushing their additional expenses to their end consumers, eventually scalping a large chuck of common American households’ savings.

Meanwhile, addressing to the US Fed’s ongoing bout against a nearly 40-year-peak inflation, Powell said in an interview with the reporters after the policy meet, “it's just the early stages. We're going to be cautious about declaring victory and ...

sending signals that we think that the game is won, because we've got a long way to go”.