The US Central Bank, the Federal Reserve, is flirting with pushing the country into a recession in its continued fight against inflation.

The Reserve yesterday hiked its interest rates by another 75 basis points as the country recorded a second quarter of economic contraction.

However, the Fed brushed aside the concerns noting that a sustained period of weakened economic activity was a small price to pay to curb rising costs.

Chevon Campbell tells us more.


The US economy has shrunk for the second quarter in a row. At the end of June, the US economy declined by 0.9 per cent.

In any other economy that would meet the definition of a recession.

However, in the United States, the National Bureau of Economic Research defines a recession as a significant decline in economic activity that is spread across the economy and that lasts more than a few months.

However, one thing is certain the rising costs of fuel and energy which have moved at their fastest pace in the US since 1981 are hurting the country.

It’s that fight that the Federal Reserve is focused on.

The Federal Reserve said on Wednesday it would not flinch even if that means a sustained period of economic weakness and a slowing jobs market.

The US Central Bank again pushed its interest rates up to reduce the demand for loans and short-term spending and encourage saving.

However, without that demand to drive growth, the economy ultimately slows.

This slowdown in the United States has consequences elsewhere.

In a high inflation, high-interest rate environment luxury spending is the first thing many cut.

And as Jamaica’s largest source market, this could ultimately harm Jamaica’s tourism sector.