It would be wise for the US central bank to raise interest rates again today. That’s what ING Germany’s chief economist, Carsten Brzeski, thinks. Analysts worry that higher interest rates, which are meant to curb inflation, will lead to more financial instability. Brzeski firm. “If you hold interest rates on hold now, you are sending a clear signal that you are panicking.”
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According to Brzeski, on the one hand it is important for the Fed to move forward, but at the same time maneuver with caution. And that means a 25 basis point increase in interest rates. ‘If you don’t do anything now and there’s a rate cut, then you’re also sending a very clear signal that you’re panicking yourself. And I think just 25 basis points today would be a very good compromise.”
’25 basis points would be a good compromise’
Although the increase of 25 basis points did not reduce inflation, the outside world made it clear that, on the one hand, the fight against inflation continues, but financial instability is also taken into account. ‘Certainly that 25 basis points isn’t a killer on inflation, because the Fed has raised interest rates massively. At the same time, you could also say that 25 basis points more or less is not going to tell whether one bank or another gets in trouble or not.’
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