ZEW Economist Friedrich Heinemann on Fed’s Interest Rate Decision

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“The Fed’s Decisions Show Where the ECB Is Heading”

The US Federal Reserve continued its series of interest rate hikes and raised the key interest rate by 0.75 basis points to a current range between 3.00 and 3.25 per cent. Professor Friedrich Heinemann, head of the Research Unit “Corporate Taxation and Public Finance” at ZEW Mannheim, has commented on this matter:

“The US Federal Reserve is fighting inflation with its rapid interest rate hikes and it will continue to follow this path. Already in early November, the key interest rate will have reached the four per cent level. In particular, the rise in core inflation, adjusted for energy and food, to over six per cent shows how broad the inflation dynamic has become by now. Unlike the ECB, the Federal Reserve has already begun to recover some of the funds it pumped into the economy during the crisis years by reducing its balance sheet. With inflationary pressures in Europe just as strong, the Fed’s decisions also show where the ECB is heading.”

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