However, the policy planners in Pakistan, living in utopia have been persistently increasing interest rate having the least realization. I am sure this news will help the policy makers in understanding my point of view.
In the United States, stocks closed sharply down on Friday following comments from Federal Reserve Chairman Jerome Powell that the Fed will press forward with raising interest rates amid lingering inflation.
Higher interest rates can restrain economic growth by making borrowing money more expensive and slowing consumer spending.
The Dow Jones Industrial Average dropped more than 1,000 points, while the Nasdaq composite dropped almost 500 points. The S&P 500 dropped by more than 140 points.
All three declines meant a more than 3% drop. All are still slightly above their levels a month ago, but much of their gains in that time were erased on Friday.
Powell gave a keynote address at the Fed’s annual policy summit in Jackson Hole, Wyo., saying that the central bank would be willing to take forceful and rapid steps to address inflation, even if it means potentially higher unemployment rates and a recession.
The Bureau of Economic Analysis revealed on Friday that inflation slowed to 6.3% in July from exactly a year ago. This figure is down from the 6.8% annual inflation rate that was reported in June.
But the Fed’s goal is to get inflation down to 2%, and Powell said the drop from last month is far short of what the Fed needs to see before it can be confident that inflation is dropping.
The Fed has already raised interest rates from a range of 0 to 0.25% in March to 2.25% to 2.5% in July. This included two consecutive increases of 0.75 percentage points, the largest monthly increases in almost 30 years.
Powell said the Fed’s decision on how much to raise interest rates next month will be based on the data it receives.
