The board of the US Federal Reserve last night increased the key interest rate by another quarter percentage points to 2.5% with the stated aim of curbing inflation and ensuring growth of the US economy as forecasted by many people.
A source from the board said that US policymakers would likely continually increase the key rate for US deposits, but “cautiously” in the following months.
According to assessments by the US Federal Reserve, the US economy is growing at a reasonable level regardless of record high crude oil prices and higher than expected employment rate. Particularly, the US government is succeeding in curbing inflation, the source said.
Many economists predicted that the US Federal Reserve would continue to increase its key rate in the next few months to reach 3.5% by the end of this year. Even, some believed that the base rate could end the year at 4%.
On the domestic front, so far commercial banks have not made any move to hike dollar deposit rates.