Fed hikes interest rates to 22-year high after June pause

Published

2 years ago

July 31, 2023

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The Federal Reserve on Wednesday took its foot off the brakes and hiked interest rates yet again — taking them to a 22-year high.

Fed Chairman Jerome Powell announced the unanimous decision for a quarter-point hike, raising the benchmark federal-funds rate to a range between 5.25% and 5.5%.

It marked the 11th increase in the past 12 meetings following last month’s brief pause.

The hike sent the benchmark rate to its highest point since 2001 — and Powell signaled that another increase is possible before the year’s out as officials continue to wrestle with stubbornly-high inflation.

The process of getting inflation back down to 2% has a long way to go,” Powell said at a press conference following the decision.

“We think were going to need to hold, certainly, policy at restrictive levels for some time, and wed be prepared to raise further if we think thats appropriate.

Powell, who initially insisted that inflation was “transitory before it soared to a four-decade high, also proclaimed that Fed staff is no longer forecasting a recession.

“We do have a shot” for inflation to return to target without high levels of job losses, he said.

“So the staff now has a noticeable slowdown in growth starting later this year in the forecast, but given the resilience of the economy recently, they are no longer forecasting a recession,” he said.

Key measures of inflation remain more than double the Fed’s target, and the economy by many measures, including a low 3.6% unemployment rate, continues to outperform expectations given the rapid increase in interest rates.

Job gains remain “robust,” the Fed said, while it described the economy as growing at a “moderate” pace, a slight upgrade from the “modest” pace seen as of the June meeting. New data on Thursday is expected to report the economy grew at a 1.8% annual pace in the second quarter, according to economists polled by Reuters.

Powell ruled out the possibility of cutting the fed rate this year.

“Well be comfortable cutting rates when were comfortable cutting rates, and that wont be this year,” he said.

Investors took the anticipated quarter-point hike in stride, pushing the Dow into the green for the 13th straight session — it’s best streak since 1987. The S&P 500 and the Nasdaq closed slightly down.

“The forward guidance remains unchanged as the committee leaves the door open to further rate hikes if inflation does not continue to trend lower,” said Kathy Bostjancic, chief economist at Nationwide. “Our view is the Fed is likely done with rate hikes for this cycle since continued easing of inflation will passively lead to tighter policy as the Fed holds the nominal fed funds rate steady into 2024.”

Despite the positive stock run, higher rates mean Americans are in for increased costs when it comes to borrowing funds to purchase homes and cars, which will likely dampen consumer spending.

The cost of credit cards may also remain high, making it more difficult for consumers to pay off their debt.

The average credit card interest rate in the US is currently 24.24%, according to LendingTree — the highest rate since the online loan marketplace began tracking average rates in 2019.

The latest figure is up from the average credit card interest rate of 16% in March 2022, just before the Fed started hiking rates.

Meanwhile, the Consumer Price Index a closely-monitored measure of inflation that tracks changes in the costs of everyday goods and services rose 3% in June versus a year earlier.

Last month’s advance was short of the 4% rise the CPI saw in May compared to the same month in 2022.

In June 2022, inflation peaked at 9.1%.

Policymakers are set to meet three more times by the end of this year, in September, November and December.

With Post Wires

Politics

The centralization crisis threatens data privacy

Published

18 mins ago

July 25, 2025

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The centralization crisis threatens data privacy

Reliance on centralized cloud infrastructure and the IRS’s proposed “mega API” expose vulnerabilities in data privacy and accountability that decentralized technologies can address.

UK

Over 200 MPs sign cross-party letter demanding Starmer recognise Palestine as a state

Published

18 mins ago

July 25, 2025

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Over 200 MPs sign cross-party letter demanding Starmer recognise Palestine as a state

Sir Keir Starmer is under increasing pressure to recognise a Palestinian state, with 221 MPs signing a cross-party letter demanding he take the step.

The letter is being organised by the Labour backbencher Sarah Champion, who also sits as the International Development Committee chair.

They write: “British recognition of Palestine would be particularly powerful given its role as the author of the Balfour Declaration and the former Mandatory Power in Palestine.

“Since 1980 we have backed a two-state solution. Such a recognition would give that position substance as well as living up to a historic responsibility we have to the people under that Mandate.”

Explainer: What does recognising a Palestinian state mean?

Earlier this month, nearly 60 Labour MPs called on David Lammy and the Foreign Office to immediately recognise Palestine as a state in a private letter, but this new call shows how dissatisfied many still are with the government’s refusal to change its stance on the issue.

As Number 10 came under growing pressure, Sir Keir on Friday released a statement on Gaza calling the “appalling scenes” in the Strip “unrelenting”.

Israel has denied there is a food shortage in Gaza – despite earlier this week more than 100 aid agencies warning of mass starvation in Gaza – and claims it had to take control of the supply and distribution of aid because Hamas fighters have been stealing aid before it reached civilians. Hamas has denied this, as have some humanitarian groups, including USAID.

Talking about the need for a regional “lasting peace”, the prime minister said: “Recognition of a Palestinian state has to be one of those steps. I am unequivocal about that. But it must be part of a wider plan which ultimately results in a two-state solution and lasting security for Palestinians and Israelis.”

In light of a tweet by the French President Emmanuel Macron, also sent last night, declaring France would recognise a Palestinian state in September at a UN conference, a number of MPs now say Number 10’s current position is untenable.

“They had said they wanted to be in lockstep with allies, but this means that position won’t hold,” said one Labour MP.

US President Donald Trump, speaking to reporters at the White House before heading to Scotland, was dismissive of Mr Macron’s statement. “What he says doesn’t matter,” he said. “He’s a very good guy. I like him, but that statement doesn’t carry weight.”

Israeli Prime Minister Benjamin Netanyahu said: “We strongly condemn President Macron’s decision to recognise a Palestinian state next to Tel Aviv in the wake of the October 7 massacre. Such a move rewards terror and risks creating another Iranian proxy, just as Gaza became.

“A Palestinian state in these conditions would be a launch pad to annihilate Israel – not to live in peace beside it.

Peter Kyle, the technology secretary, on Friday morning defended the government’s resistance to calls for immediate UK recognition of a Palestinian state.

“We want Palestinian statehood. We desire it, and we want to make sure the circumstances can exist where that kind of long-term political solution can have the space to evolve and make sure that it can become a permanent circumstance that can bring peace to the entire region,” he told Sky News.

“But right now, today, we’ve got to focus on what will ease the suffering, and it is extreme, unwarranted suffering in Gaza that has to be the priority for us today.”

An emergency call with Germany and France was scheduled for Friday to discuss what Sir Keir described as a “human catastrophe” which has “reached new depths”.

The Foreign Office has maintained it is committed to recognising a Palestinian state but has expressed a willingness to do so only when it will have the “most impact in support of a peace process”.

It said: “We continue to provide lifesaving aid to support Palestinians in Gaza and the West Bank, and to work closely in support of the Palestinian Authority.”

UK

Home Office threaten asylum seekers with homelessness if they refuse hotel move

Published

18 mins ago

July 25, 2025

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Home Office threaten asylum seekers with homelessness if they refuse hotel move

Asylum seekers risk becoming homeless if they refuse accommodation under plans to end the use of expensive hotels.

Announcing the policy on Friday, the Home Office said some migrants were “gaming the system” by resisting efforts to move them into alternative housing without a valid reason.

Politics Live: Macron lays out plan for France to recognise a Palestinian state.

The new Failure to Travel policy means housing support will be removed from those who block transfer requests.

The Home Office said this will “ensure individuals who are moved from hotels to suitable alternative accommodation must take it”.

They added: “Those who refuse to move without a valid reason will now risk losing their housing and support. It is a firm but fair approach, aimed to end abuse of asylum support and contribute towards the closure of costly hotel accommodation.

“While the government has a duty to support all asylum seekers who would otherwise be destitute in appropriate accommodation, the new policy establishes clear consequences for those who game the system whilst protecting the vulnerable.”

There would be several steps before stripping someone of accommodation – with it being a last resort, Sky News understands.

It follows a week of unrest outside a hotel in Epping used to house asylum seekers.

Several demonstrations have been held outside the Bell Hotel since 13 July, after an asylum seeker was charged with allegedly attempting to kiss a 14-year-old girl.

Hadush Gerberslasie Kebatu, 38, from Ethiopia, denied sexually assaulting the 14-year-old girl at Chelmsford Magistrates’ Court last week and will stand trial in August.

On Thursday Epping council unanimously voted to urge the government to shut the site.

Ministers are under pressure to restore order amid fears of further unrest, like that seen in Southport last summer.

Labour has pledged to end the use of asylum hotels by the end of this parliament, a move chancellor Rachel Reeves has claimed will save £1bn a year.

However there is a question mark as to how this will be achieved as Channel Crossings continue to rise. Nearly 20,000 migrants made the journey to the UK in the first six months of this year, a rise of almost 50% on the number crossing in 2024 and a new record for the first half of a year.

Ministers say they inherited a “broken system”, with 400 hotels being used to accommodate asylum seekers at the peak of the crisis under the Tories, costing £9 million per day.

Minister for Border Security and Asylum, Dame Angela Eagle, said: “We inherited an asylum system on the brink of collapse – mismanaged, under strain, and costing the public a fortune. We are getting a grip.

“We are working to close hotels, restore order, and put fairness and value for money at the heart of our asylum system. This government is making those necessary decisions to protect the taxpayer and uphold the integrity of our borders.

“These reforms to the Failure to Travel policy are another example of this government’s action to transform the asylum accommodation system and crack down on those who abuse our system, so it operates fairly and saves the taxpayer money.”