In the News
US Federal Reserve raises interest rates by 0.75%
The US Federal Reserve has announced a sizeable increase in interest rates of 0.75% and a new target interest rate of 2.25% to 2.50%.
Whilst the move is designed (with an uncertain time lag) to rein in US inflation, the wider implications are a higher cost of borrowing for developing economies because of a strengthening of the dollar - and a commensurate rise in the cost of importing dollar-denominated commodities and even greater stresses for the global economy as a whole.
More than half of the world's goods are priced in US dollars, so when the dollar strengthens, then the price of imported food, energy and other commodities for many countries - high and low-middle income alike - tends to rise adding to cost-push inflation in these nations.