The Fed is getting ready to raise its interest rate this week

The Fed is getting ready to raise its interest rate this week

“The meeting of the monetary policy committee (FOMC) began at 07:00 am (CDMX time) as scheduled,” said a Fed spokesman.

At the end of this meeting, on Wednesday at 12:00 hrs. A statement will be published, and the president of the monetary entity, Jerome Powell, will give a press conference at 12:30 p.m. (18:30 GMT).

Analysts predict that after spending two years at a very low level of 0 to 0.25% to sustain the economy through consumption, the reference rates should have a first increase and return to a range of 0.25% to 0.50%. , or directly from 0.50% to 0.75%, which would be an unusually sharp increase.

Powell has come out very clearly in favor of just a 0.25 point increase.

This increase will have the effect of pushing commercial banks to offer their customers higher interest rates on loans.

The Fed seeks to slow consumption and thus reduce pressure on prices. Especially since the supply problems that deepen the shortage of some products are expected to last for months.

The monetary policy committee will also say how many rate hikes it expects this year and next, and update its forecasts for gross domestic product (GDP) growth, inflation and unemployment.

Powell will “walk a tightrope, balancing the needs to raise rates and curb a more systemic rise in inflation with the need to avoid a meltdown in credit markets,” Grant Thornton chief economist Diane Swonk said.

Powell has expressed confidence that the central bank is well equipped to manage inflation risks, but has acknowledged the uncertainty surrounding the impact of the war.

The US producer price index (PPI) rose 10% in the 12 months ending in February, with goods prices posting their biggest monthly rise, largely due to energy, the Commerce Department said on Tuesday.

Oil prices have soared since the start of the conflict in Ukraine, but fell below $100 a barrel on Tuesday amid optimism over peace talks between kyiv and Moscow.

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