As America raises rates, the rest of the world bears the pain

The Federal Reserve’s latest lift offers little help for the global economy

, as the Federal Reserve prepared to intensify its fight against inflation, a noose has tightened around the global economy. On September 21st the Fed delivered a 0.75 percentage-point interest-rate rise, its third in a row. The Fed’s benchmark rate now stands at 3-3.25%, up three percentage points since the start of the year. While the rise was anticipated, the central bank offered a surprise: new projections revealed that rates would probably rise to more than 4.5-4.

The flow of capital towards America’s fast-rising interest rates is proving increasingly difficult for other economies to handle. Falling currencies mean higher import prices, exacerbating inflation problems and forcing central banks to undertake their own whopping rate-rises. On September 20th the Swedish Riksbank lifted its benchmark rate by a full percentage point; the Bank of England is expected to mirror the Fed’s 0.75 percentage-point rise on September 22nd.

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TheEconomist /  🏆 6. in UK

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