US government borrowing costs have reached a 19-year high after the Federal Reserve held its main interest rate steady, raising concerns the central bank may not act quickly enough to tame rising inflation.
Key facts
- The yield on the 30-year US Treasury bond rose 14 basis points to nearly 5.24%, a 19-year high.
- The Federal Reserve held its main interest rate at between 3.5% and 3.75%.
- It was the fifth meeting in a row at which the Fed held rates steady.
- Borrowing costs are now at their highest level since 2007.
US government borrowing costs have hit their highest level since 2007 after the Federal Reserve voted to hold its key interest rate steady, according to the Guardian. The decision has fed fears that the central bank may not move fast enough to tame a rise in inflation.
The yield – or interest rate – on the 30-year US Treasury bond rose 14 basis points to nearly 5.24%, a 19-year high. The move followed the Fed’s announcement that it would keep its main rate unchanged.
The Federal Reserve held its main rate at between 3.5% and 3.75%, marking the fifth consecutive meeting at which policymakers opted to leave borrowing costs unchanged.
The bank’s chair pledged to keep up the fight against inflation, according to the Guardian. However, the decision to hold rates has brought concerns about a possible failure to keep pace with rising prices.
The rise in long-term Treasury yields reflects investor unease over the path of inflation and the central bank’s response. Higher yields on government bonds typically translate into higher borrowing costs across the wider economy.
Why it matters
Treasury yields influence the cost of borrowing for the US government, businesses and households, including mortgages and loans. A 19-year high in these costs signals investor concern about inflation and could ripple through the broader economy.
Frequently asked questions
How high did US Treasury yields rise?
The yield on the 30-year US Treasury bond rose 14 basis points to nearly 5.24%, a 19-year high, according to the Guardian.
What did the Federal Reserve decide?
The Federal Reserve voted to hold its main interest rate at between 3.5% and 3.75%, the fifth meeting in a row it has kept rates steady.
Why are borrowing costs rising?
Borrowing costs rose after the Fed's decision to hold rates, feeding fears the central bank may not move fast enough to tame a rise in inflation.