Counting the Cost

Is the US Fed right about raising interest rates?

The US Federal Reserve raised interest rates again to rein in inflation, despite the turmoil in the financial sector.

Inflation in the United States hit a 40-year high over the past 12 months and the Federal Reserve raised interest rates eight times to rein in price increases.

But the policy depresses the value of the bonds on banks’ balance sheets and it has been linked to the uncertainty in the banking system.

At its latest meeting, the Fed was forced to make the tough choice between focusing on forcing down inflation or holding rates steady to avoid market turmoil.

In the end, it agreed to hike rates by a quarter-percentage point.

Elsewhere, South Africa is suffering its worst-ever power cuts. How is this affecting the economy?