'Disastrous effects': Outrage in US as interest rate surge sends 'markets reeling'

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Republicans have hit out at the latest US interest rate hike of 0.75 percent, saying it will have “disastrous effects”. The Federal Reserve announced on Wednesday an expected fourth consecutive “jumbo” rate hike to a total of 3.75 percent, in a bid to combat sky-high inflation.

Republican Senators, including Marsha Blackburn, blamed Joe Biden for the latest spike.

She said on Twitter: “Today’s decision by the Fed to again increase interest rates is further proof of the consequences of the disastrous effects of socialism via Biden’s $1.9 trillion bailout.”

Sen. Thom Tillis also said: “Out-of-control inflation, largely caused by Biden’s overspending, once again forced the Fed to raise interest rates.

“It’s long past time for Congress to pursue common-sense fiscal restraint to get our economy back on track.”

The Heritage Foundation, an American conservative think tank based in Washington DC, also said on Twitter: “Spending, borrowing, and printing trillions of dollars results in higher interest rates on credit cards, mortgage, auto loans, and other forms of borrowing.

“Avg. borrowing costs have gone up by $1,300 under Biden and STILL he’s treating the Fed like a personal money gun.”

Steve Cortes, a financial commentator, said: “Tough talk from the Fed to fight the inflation that they and Biden produced — sends markets reeling today.

“Here, the Retailer sector loses four percent on the day. The pain persists, financial anxiety rises along with Interest Rates.”

It is the sixth consecutive interest rate hike in a row, brought in to battle a 40-year high in inflation.

Inflation stands at 8.2 percent in the year to September 2022 in the US, according to the Bureau of Labor Statistics.

The raise was driven by the increased cost of shelter, food and medical care.

While raising interest rates can slow inflation by making borrowing more expensive, the move further increases debt costs for Americans already struggling with rising prices.

It follows a now-deleted tweet from the White House which touted an increase in Social Security payments, which rise in line with inflation.

Asked about the White House’s assertion that “President Biden’s leadership” is responsible for the Social Security increase, Gary Engelhardt, a Syracuse University economics professor who studies Social Security, told CNN: “This assertion is incorrect.

“The Social Security COLA is mandated by law (and has been for decades) and is tied to the rate of increase in the Consumer Price Index (i.e., inflation).

“President Biden has control over neither. From a political standpoint, it is a decidedly positive spin on a problem (inflation) plaguing his approval ratings.”

In addition, a Reuters/Ipsos poll found 31 percent of Americans view inflation/rising costs as the most important problem facing the US.

The survey polled 4,413 adults over 18 between October 18 and 24.



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