US Fed set for further steep rate hike as recession fears loom?

The US Federal Reserve is pegged to make a fourth straight steep hike in the key interest rate this week as it battles surging costs, with its aggressive stance fueling expectations of a recession.

American households have been squeezed by soaring consumer prices, propelling economic issues to the top spot among voter concerns in upcoming midterm elections. Fed officials walk a tightrope to try and rein in prices while avoiding a downturn.

To raise borrowing costs and cool demand, the US central bank has already cranked up the benchmark lending rate five times this year, including three straight 0.75 percentage point raises.

But with persistently high inflation and a tight labor market supporting wages and spending, analysts say another 0.75 point hike is almost certain at central bankers' next policy meeting.

Further Fed hikes are also expected to dampen consumer and business spending, making it more attractive to save rather than spend.

Analysts warn that the economy could enter a recession in 2023 on the effects of the Fed's rate hikes, inflation and a global slowdown in growth.