On Wednesday, the Federal Reserve, the US central bank, he announced a new increase in interest rates of 25 basis points (in practical terms of 0.25 per cent), bringing them up to a range between 4.50 and 4.75%, the highest since September 2007 . It is the eighth consecutive increase and has the objective of trying to contain inflation, ie the generalized increase in the price level. At the same time, however, it is a smaller increase than the one decided in recent months: the last time the Federal Reserve had raised interest rates by 25 points was in March of last year, and since then it had raised them by four times by 75 points and in December by 50 points. It is a sign that the economy is progressively improving and that inflation is gradually decreasing (as seen also in Europe).
Interest rates are the rates at which central banks lend money to other banks, basically the cost of borrowing. Historically, raising interest rates has been the best tool available to central banks for bringing inflation under control, because increasing the cost of money reduces the phenomena that lead to an increase in prices.
Jerome Powell, chairman of the Federal Reserve, explained that it is still too early to say that the world economy is actually stable, and that in the coming months it is likely that there will still be more interest rate hikes at the level decided on Wednesday.
