Explained: Fed Reserve rate hike, US recession and impact on India

The US economy is facing a curious situation. On the one hand, it is experiencing a four-decade high inflation rate and, on the other, its unemployment rate is at five-decade low.


In its continuing bid to cool down raging inflation in the United States — at 9.1% in June, the inflation rate is at a four-decade high — the Federal Reserve or Fed (US’ central bank) decided to raise the Federal Funds Rate target by another 75 basis points on Wednesday. Since March, the Fed has steadily pushed up the targeted FFR from zero to almost 2.5% now.

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