Fed announces sixth consecutive hike in US interest rates to fight inflation

The Federal Reserve stepped up its fight against a 40-year high in US inflation on Wednesday, announcing its fourth consecutive three-quarters of a percentage point hike in interest rates but signaling the pace of increases may soon slow.

The central bank does not expect inflation or interest rates to reach the levels seen in the 80s. Powell has indicated that the Fed expects rates will reach 4.4% by the end of the year and start coming down until 2024. Fed officials had expected inflation to decline this year.

US stock markets rose as the Fed indicated that the pace of rate rises could start to taper but sank as Powell made clear that rates would continue to rise and could stay high for longer than the Fed had first indicated.

The impact of rate rises takes time to filter through to the wider economy and while growth in the US housing market appears to be slowing, hiring has remained robust. It is expected to weaken as companies count the cost of higher borrowing.