US interest rates set by Federal Reserve rise to their highest since 2007 but the pace of the increase slows

Published

3 years ago

December 14, 2022

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US interest rates are now at their highest since the global financial crisis as the US central bank has again imposed an increase as it seeks to lower inflation.

The Federal Reserve, known as the Fed, has imposed a 0.50 percentage points rise in interest rates.

The widely-expected rise will mean more expensive borrowing for the likes of American mortgage holders and those paying credit card debt.

Following the increase, US interest rates stand at 4.25% to 4.5%, up from 3.75% to 4% since the last increase in November.

In the US, the interest rate is a range, rather than a single percentage – as in the UK – because the Fed is not permitted to set a specific number. A target rate is instead set as a guide for banks to follow.

The increase is less than the four previous hikes of 0.75 percentage points, indicating the Fed is slowing down in its fight against inflation.

It had embarked on the programme of interest rate rises to bring inflation down to its target of 2%.

That pace of rate rises has reduced as inflation in the world’s largest economy appears to be slowing. Prices increased 7.1% in the year up to November, the US Department of Labor announced on Tuesday, down from a 40-year high of 9.1% in June.

After announcing the latest rate increase, the Fed was firm that it was not letting up in its campaign of rises.

Speaking after the decision, the chair of the Fed, Jerome Powell, said he expected there would be ongoing increases and a sustained period when the interest rate is kept high.

In response to continuing high inflation, rates are likely to reach 5.1% by the end of next year, he said, a half percentage point higher than projected in September.

It will take time for inflation to be affected by higher interest rates, he warned, adding: “We are seeing the effects on demand in the most interest sensitive sectors of the economy such as housing. It will take time, however, for the full effects of monetary restraint to be realised, especially on inflation.”

Despite this, he acknowledged the US economy has “slowed significantly”.

He projected GDP growth, a measure of economic output, will be small, just 0.5% this year and next.

The US labour market, however, remains “extremely tight” with the unemployment rate near a 50-year low and job vacancies “still very high”, and wage growth elevated.

Mr Powell recognised the pain inflation was causing US households. But it will not reduce to that 2% target for a further two years, he said.

Inflation will be 5.6% this year, 3.1% next year, 2.5% in 2024 before falling to 2.1% in 2025, the Fed forecast.

“We understand that our actions affect communities, families and businesses across the country. Everything we do is in service to our public mission,” he said.

A similar decision on interest rates is to be announced by the Bank of England on Thursday. The Bank is also expected to increase the cost of debt in an effort to depress economic activity and rein in inflation.

Central banks had been asked not to increase rates by the United Nations Conference on Trade and Development.

A recession worse than that experienced after the global financial crisis could result from monetary regulators tightening policy and hiking interest rates, it warned.

US

Why has Trump just called his own supporters ‘stupid’?

Published

16 hours ago

July 17, 2025

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Why has Trump just called his own supporters 'stupid'?

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Trump scrambles to try and fire the chair of America’s central bank – despite being constitutionally barred from sacking him without just cause.

All of this feels like distraction and obfuscation from the Epstein files debacle – a political crisis that is eating MAGA alive.

Plus: tensions are flaring in the Middle East once again. US Secretary of State Marco Rubio is urging de-escalation between Israel and Syria.

If you’ve got a question you’d like the Trump100 team to answer, you can email it to trump100@sky.uk.

You can also watch all episodes on our YouTube channel.

US

California: 21 children taken into custody – amid claims couple misled surrogate mothers across the US

Published

16 hours ago

July 17, 2025

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California: 21 children taken into custody - amid claims couple misled surrogate mothers across the US

Police have taken 21 children into custody, amid allegations that a couple in Los Angeles may have misled surrogate mothers across the US.

Silvia Zhang, 38, and Guojun Xuan, 65, are believed to be the legal parents of the children, who are aged between two months and 13 years old.

“We believe one or two were born biologically to the mother,” Lieutenant Kollin Cieadlo said. “There are some surrogates who have come forward and said they were surrogates for the children.”

“The couple told police that they wanted a large family,” he added.

Fifteen children were removed from the couple’s home in Arcadia, about 13 miles northeast of downtown Los Angeles, after an abuse allegation was made. Another six living in the care of family and friends were also located.

The couple were arrested in May after a hospital reported that their two-month-old infant had a traumatic head injury – with a nanny accused of violently shaking the baby.

The infant was not taken to hospital until two days later, after they began suffering seizures.

CCTV footage recorded inside the home showed the children being emotionally and physically abused by at least six nannies.

Lt Cieadlo said Zhang had produced what appeared to be legitimate birth certificates, including some from outside California, that list her as the mother of the children.

Business records show a company called Mark Surrogacy Investment LLC was previously registered at the couple’s address, although the most recent documents show the business licence ended in June.

Police said they are investigating whether the children found at the home in the San Gabriel Valley were part of a surrogacy scam.

Lt Cieadlo also confirmed officers were working with the FBI as part of their investigation.

Kayla Elliott, one of the surrogate mothers who has come forward, told Sky’s US partner NBC News: “I was a bit hysterical. You just don’t expect that you’re going to go through a pregnancy and a delivery and then hand the baby over to their parents and then all of a sudden find out that there was abuse and neglect going on.”

Arrest warrants were issued for Zhang, Xuan and the 56-year-old nanny, who was not in custody on Wednesday. Zhang and Xuan were detained on suspicion of child endangerment/neglect.

The Los Angeles County Department of Children and Family Services, which removed the couple’s children, declined to comment on the case.

US

Ghislaine Maxwell could use ‘government misconduct’ to challenge imprisonment

Published

1 day ago

July 16, 2025

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Ghislaine Maxwell could use 'government misconduct' to challenge imprisonment

Disgraced British socialite Ghislaine Maxwell could use “government misconduct” to challenge her imprisonment, her family has claimed.

The 63-year-old, who was jailed in 2022 for luring young girls to massage rooms for Jeffrey Epstein to abuse, is currently serving a 20-year prison sentence.

Maxwell’s family have frequently claimed she “did not receive a fair trial”, but legal appeals against her sex trafficking convictions have been rejected by the courts.

The latest challenge from the Maxwell family comes as President Donald Trump faces questions over whether or not he will order the release of the so-called Epstein “client list”, following a backlash from Republican loyalists who have called for any list to be made public.

Judges previously dismissed arguments from Maxwell’s lawyers that she “should never have been prosecuted” because of a “weird” agreement drafted more than 15 years ago.

The family argue that Maxwell should have been protected under an agreement Epstein had entered with the US Department of Justice in 2007, which agreed not to prosecute any of his co-conspirators.

During her trial in 2021, Maxwell was described as “dangerous” by prosecutors, who told jurors about how she would entice vulnerable girls to go to Epstein’s properties for him to sexually abuse.

In a statement, her family said: “Our sister Ghislaine did not receive a fair trial.

“Her legal team continues to fight her case in the courts and will file its reply in short order to the government’s opposition in the US Supreme Court.”

David Oscar Markus, one of her lawyers, said in the statement released by her family: “I’d be surprised if President Trump knew his lawyers were asking the Supreme Court to let the government break a deal.

“He’s the ultimate dealmaker and I’m sure he’d agree that when the United States gives its word, it should keep it.

“With all the talk about who’s being prosecuted and who isn’t, it’s especially unfair that Ghislaine Maxwell remains in prison based on a promise the US government made and broke.’

“These are sentiments with which we profoundly concur.”

Epstein, 66, was found dead in his cell at a Manhattan federal jail in August 2019 as he awaited trial on sex trafficking charges. His death was ruled a suicide.