In the end, it could have been worse. The Federal Reserve might have followed Sweden’s lead, with a whole one point rise in interest rates, or it could have even decided to short-circuit the whole process and go straight for a 1.5 per cent increase. Instead, it opted for the safer course, imposing a 0.75 per cent increase in rates much as the market expected. Even so, it made one thing absolutely clear. It is not going to let up in its battle to bring inflation back under control – and the rest of the world will have no option but to follow its lead.
The markets were primed for another rise in rates from the Fed chairman Jay Powell today. That was precisely what he delivered. American interest rates will go up to 3.25 per cent, the highest level since before the financial crash of 2008/2009.
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