News analysis

Fed rate hikes raise threat of US recession, higher borrowing costs in S'pore

Singaporeans with home mortgages will feel the heat when banks revise borrowing rates. ST PHOTO: LIM YAOHUI
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SINGAPORE - The biggest Federal Reserve rate hike in 28 years portends higher costs of borrowing and will likely depress consumer sentiment, potentially sending the US economy into a sharp slowdown, if not a recession.

That seems to be the emerging consensus as the world wakes up to Fed decision to raise its benchmark federal funds rate by 75 basis points to a range of 1.5 per cent to 1.75 per cent. The move has a direct impact on things such as credit card bills, new car loans and mortgages, though the Fed does not set those interest rates itself.

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