The increase in key interest rates is an attempt to curb skyrocketing inflation.
of the United States the central bank Fed is expected to significantly raise its key interest rate today. The bank is expected to raise the interest rate by as much as 0.75 percentage points. The Fed ended up raising the key interest rate by 0.75 percentage points in June as well.
The market anticipates that shares traded on the US stock market will become more expensive on Wednesday, despite the interest rate hike.
For example, the futures of the Nasdaq, which tracks technology stocks, are up by about 1.5 percent at 1 p.m. Finnish time, and the futures of the S&P500 index, which tracks large companies more broadly, are up by about 0.9 percent.
The rise in technology stocks and the rise in futures trading have been accelerated by the better-than-expected results of Google’s parent company Alphabet and Microsoft, among others.
of the United States the central bank’s intention to raise interest rates is based on an effort to slow down the rapidly galloping inflation. Annual consumer price inflation was 9.1 percent in June, i.e. the fastest in more than 40 years.
If the Fed ends up raising the key interest rate, it will be the fourth rate hike this year. One-off purchases have increased over the year, as the key interest rates were raised by 0.25 percentage points in March and by 0.5 percentage points in May.
The US stock market has been in a sharp plunge during 2022. For example, the technology-focused Nasdaq index has fallen by 26 percent during the year, and the S&P500 index, which tracks large companies more widely, by almost 18 percent.
The background of the turbulence is largely galloping inflation and fears of interest rate hikes aimed at curbing inflation.
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