The US Federal Reserve has raised its benchmark policy rate by another half percentage point on Wednesday.
The widely anticipated move was the seventh rate hike this year.
It brings the federal funds rate, a base rate for many loans and financial products, to a new target range of 4.25% to 4.5% – the highest in 15 years.
The 50 basis points increase indicates a shift to lower interest rate movements to bring down inflation in the future.
Fed officials expect to keep rates higher through next year up to a rate of 5.1%, with no reductions until 2024.
At a news conference, Fed Chairman Jerome Powell said, “Inflation data received so far for October and November show a welcome reduction in the monthly pace of price increases.
“But it will take substantially more evidence to have confidence that inflation is on a sustained downward” path.
Inflation data in November suggested that prices in the United States have peaked.
Although annual US inflation is still at 7.1%, core inflation increased at the lowest rate since August 2021.
US consumer prices have come down from a peak annualized increase of 9.1%, the highest in 40 years, in June 2022.
Energy prices contributed to the cooling of the consumer price index in November, with medical services, air travel and hotels also declining in price.
In contrast, housing and food saw the highest monthly price growth.
The cost of groceries, which includes products that are imported to Cayman, indicates that local consumers are unlikely to see their supermarket bills come down anytime soon.
Local banks, meanwhile, will pass on the latest interest rate rise directly to borrowers in their loans, mortgages and other credit products.
Proven Bank said it would delay the rate increases on variable rate loans until 2023 to give customers a small respite from further financial strain during the holiday season.
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