The US Federal Reserve announced its decision to raise interest rates, bringing borrowing costs to the highest level in more than 22 years.


In a move that was widely anticipated, the Federal Open Market Committee raised the interest rate by 25 basis points to a range between 5.25% and 5.50%, a range not reached since early 2001.


The Fed's statement showed that the Open Market Committee will continue to evaluate more additional data released in order to take action on monetary policy.


The statement added that there is a single change in the pace of economic growth, which was described as moderate compared to the modest one in the statement of last June, but the expectations of at least a slight recession were reaffirmed.

The decision to raise interest today is the eleventh since the start of the monetary tightening cycle by the Federal Reserve in March 2022 to control inflation.


And the Federal Reserve Chairman, Jerome Powell, still believes that inflation is very high, and he said in late June that he expects more tightening in monetary policy, a term that alludes to more interest-raising decisions.


Recent US inflation data revealed more encouraging signs, with the CPI rising 3%^ year-on-year in June, up from 9.1% a year earlier.


American consumers are also becoming more optimistic about inflation, as shown by the US Consumer Expectations Survey data, at a rate of 3.4% in the coming year.


Nevertheless, the core CPI - when excluding energy and food prices - remained at 4.8% last month, and the personal consumption expenditures index, the Fed's preferred measure of inflation, came in at 3.8% in its core reading. ‏


All of this data is still above the target set by the Fed for inflation at 2%, which justifies raising interest rates in conjunction with reducing the Fed's bond holdings, which reached a peak of $9 trillion before the start of monetary tightening.

In a press conference commenting on the Fed's statement, Powell said that he expects to raise or fix interest rates at the next September meeting.

Powell stressed that the Fed will monitor the economic data issued in the coming period, and if necessary, interest rates will be raised again.


He also stressed that the US economy is growing at a moderate pace and that the Fed continues to see strong job growth.