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Largest Interest Rate Increase in Almost 20 Years Expected

June 15, 2022

Several investment bank and financial services companies predict that the U.S. Federal Reserve will raise interest rates by as much as 75 points when it meets today, Reuters reported.

Financial services firm Goldman Sachs said it expects 75-basis-point increases in June and July, and then a 50-basis point hike in September. A 75-basis-point hike would be the biggest increase since 1994.

Other financial advisors like Barclays plc and Jefferies Group also forecast a 75-basis-point hike this month. Expectations for a 75 point hike jumped to 96% from 30% earlier in the week, according to the Chicago Mercantile Exchange’s (CME) Fedwatch Tool.

Although other large Wall Street investors do not predict an immediate 75-basis-point increase, they believe the probability of a large rate hike in the next few months is increasing. Standard Chartered predicted that even a 100-basis point hike was possible.

After years of low interest rates, the Federal Reserve approved a 0.25 percentage point rate hike in March, the first increase since December 2018. With inflation a major concern among both consumers and businesses, financial experts knew it was only a matter of time before the Fed raised interest rates.

Learn how businesses can cope with rising interest rates.

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