The Federal Reserve, the U.S. central bank, has hinted of another increase in interest rates. The Associated Press reported that Federal Reserve Governor Michelle Bowman said Monday that “she was open to lifting interest rates by more than the traditional quarter-point at the central bank’s next meeting in March.”
Governor Bowman’s statement follows recent similar remarks by other Federal Reserve officials.
Interest rates in the United States have been gradually moving up since late last year, when the Federal Reserve started gradually raising interest rates.
Credit markets are anticipating more rate hikes. Nerdwallet, a website tracking interest rates on mortgage loans, reports a steady rise, with the interest on a 30-year mortgage loan having increased by one percentage point, from just below 3% to almost 4%, since early December.
The yield rates on U.S. Treasury securities have increased significantly since before the Federal Reserve declared its intention to raise interest rates. On 1 September 2021, a month before the rate hikes began, the benchmark 10-year treasury security yielded 1.31% while the 1-year security paid 0.07%. By contrast, on Friday, 18 February 2022, the 10-year security paid 1.92% compared to 1.03% on the one-year security.
While government security yields have been on the rise in the euro zone as well, the European Central Bank has thus far stayed committed to low, steady interest rates. Its deposit facility rate has remained at -0.5% since September 2019. There is growing anticipation of a rate increase by the ECB during 2022. At least one news source quotes ECB chairman Christine Lagarde as “no longer ruling out” a rate hike this year.