The Fed is expected to announce a new record hike in its interest rate

The Federal Reserve of the United States (FED) will begin to define this Wednesday in Washington -at the end of a two-day meeting that began today- if it puts a ceiling on the rise in its reference interest rate or if on the contrary continues with the aggressive policy of previous months to contain inflation.

According to analysts,FED officials’ vote could be dividedbetween those who want to curb rate increases, so as not to provoke the start of a recessive economic cycle, and those who want to ensure control of price increases, to put limits on the worst inflation in four decades.The decision of the monetary governing body comes less than a week before crucial legislative elections that will renew half of the Capitol and define the economic policy framework for the rest of President Joseph Biden’s administration.Most market analysts are betting that Fed Chairman Jerome Powellcould signal an upcoming shift towards smaller rate increases.

The Bloomberg Agency pointed out that Powell could present the possibility of an increase of 50 basis points as a base scenario for December, although it would maintain an adjustment of 75 basis points in the federal funds rate, raising it to a target range between 3.75 and 4% due to the firm Underlying inflation.The wall street analysts They consider that “a more gradual pace would also allow Fed members to better calibrate future increases, depending on how the real economy is adjusting to the long and variable lags of monetary policy.The doubt of the directors of the Federal Open Market Committee is if a slower pace of rate hikes may run the risk of ease financial conditions and refuel consumption and inflation.Many are inclined to ensure that the inflation curve slows down and converges again towards the objective of an annual price rise of around 2%, as defined by the FED on repeated occasions.The waters are also divided among Fed officials as the latest rate hikes have made borrowing more expensive and caused home and car sales to slump.The average rate of one 30 year fixed rate mortgagewhich was only 3.14% a year ago, exceeded 7% last week for the first time since 2002 and existing home sales have fallen for eight straight months, according to mortgage loan lender Freddie Mac.However, the latest economic data seems to complicate the work of Powell and his collaborators.

With the background Of The Midterm Elections, And although the state of the US economy is unclear, job openings reached 10.7 million jobs and high inflation has become a central point of attack for Republicans against Democrats.The consumerspressured by high prices and more expensive loans, are starting to spend less. Shipping costs have plummeted 67% in the last year, meaning fewer shortages. Wage growth is stabilizing, which should reduce inflationary pressures.“We need to see real progress in core inflation and services inflation, and we’re not seeing it yet,” Neel Kashkari, president of the Minneapolis Fed, said recently.Fed Vice President Lael Brainard He said “going forward deliberately” would help determine how the economy is handling its rate hikes and how many more might be needed.Mary Daly, President of the San Francisco FED, He noted that the agency “will not pursue three-quarter-point rate increases indefinitely. Now is the time to start talking about quitting.”