With the objective to contain inflation, the United States Federal Reserve raised interest rates by 0.5 points, leaving them between 0.75% and 1%. It is the second increase this year, they had already raised rates 25 basis points in March, and this is the largest increase in 22 years.
The challenge for the Federal Reserve is to keep raising rates to contain inflation without triggering a recession. Powell was convinced of the possibility of “a soft landing”, but also acknowledged that “it will not be easy to achieve”. The US economy already contracted 1.4% in the first quarter of this year, another contraction in GDP for the second quarter would spark a recession.
