As the U.S. Federal Reserve on Wednesday raised its benchmark interest rate by a half percentage point, a Nairobi-based expert warns that "we're going to have a vicious cycle, where there's less money in the U.S. and definitely less money going to the developing world."
The Fed's latest move marks the sharpest rate hike since 2000, as it takes more aggressive steps to rein in the highest inflation in four decades.
There are high price hikes in developing countries, as the U.S. dollar then becomes more expensive to purchase from the market, said Stephen Ndegwa, a lecturer at United States International University (USIU-Africa).
Ndegwa noted that "it is going to be a vicious circle, where the big corporates are able to get more income for producing more goods," but these goods will be "so expensive to the poor, and to the developing world in general."
The Fed usually lifts interest rates by a quarter percentage point, and the newly announced half-percentage-point rate hike, along with the imminent move to shrink its 9 trillion-dollar balance sheet, would mark a shift to a more aggressive tightening mode.
The Fed's decision was aimed at fighting the surging inflation, as concerns are growing that high inflation would become entrenched.
Produced by Xinhua Global Service
