Federal Reserve prepares for potential new cycle of interest rate hikes

The Federal Reserve is preparing for another round of interest rate increases to control ongoing inflation, Cryptopolitan reported. Central banks across the world are following suit as high borrowing costs remain painful. Cryptopolitan reported that 15 of the 33 major central banks, or 45 percent, have raised interest rates over the last six months. [1]

Federal Reserve voting member Hammack stated that combatting inflation requires faster and more frequent small rate adjustments, according to Futu Niu Niu. Hammack warned that policymakers must guard against the entrenchment of inflation expectations. Meanwhile, Mortgage Professional America reported that the Mortgage Bankers Association expects two more Federal Reserve rate hikes, with one planned in December and another in the first quarter of 2027. [2][3]

The potential monetary tightening comes after earlier action by American central bankers. As FTMQ Business reported earlier, Federal Reserve meeting minutes showed policymakers expected another rate increase before the end of the year to address persistent price increases. The Federal Open Market Committee voted unanimously 12 to 0 in September to raise rates to a range of 3.75 percent to 4.00 percent, which helped push mortgage rates to a three year high above 7 percent. [9]

The Federal Reserve System serves as the central banking system of the United States. It was established on December 23, 1913, through the enactment of the Federal Reserve Act after a series of financial panics highlighted the need for central monetary control. [7]

The recent global shift toward higher borrowing costs marks a major shift in monetary policy. The 45 percent share of central banks tightening policy in the past six months represents the largest proportion since 2023, Cryptopolitan reported. The level is approaching the 55 percent benchmark observed in 2011 and 2018. [1]