The Federal Reserve (fedUS central bank) on Wednesday raised its benchmark rates by a quarter of a percentage point. youIt also announced that it expects new increases after this eighth consecutive increase and no cuts this year, in a context of inflation that is moderating “but remains high.”
The rates of the fed They have now reached a range of 4.50-4.75%.
“Recent indicators show moderate growth in spending and production,” remarked the Monetary Policy Committee of the fed (FOMC) in a statement after two days of meeting, the first of the year.
“Inflation moderated a bit but remains high,” the agency added.
For this reason, the committee “anticipates” that new rate increases “will be appropriate” to drive inflation to the 2% annual target, the text explains.
In addition, the president of the organization, Jerome Powell, ruled out an interest rate cut this year, as expected by some in the market.
At a press conference, Powell considered that although the US economy is cooling off and inflation is “slowly” moderating, it is not “opportune to lower rates this year or ease monetary policy.”
The fed It has raised benchmark interest rates eight consecutive times since March 2022, including four straight increases of 0.75 percentage points, in an attempt to cool the economy and contain inflation.
Making credit more expensive means discouraging consumption and investment, and removes pressure on prices.
This quarter-point increase announced Wednesday marks a moderation from December’s half-point increase and larger increases last year.
Inflation in December was 5% at 12 months compared to 5.5% in the moving year ending in November, according to the PCE index, which is the most followed by the fed.
the fight continues
Although the recent data is “encouraging”, “more evidence will be needed to convince us that inflation is moderating on a lasting basis,” Powell also said.
The fed he wants “concrete evidence that they contained inflation, and he doesn’t have it yet,” Ryan Sweet, chief economist at Oxford Economics, summarized on his side in dialogue with AFP.
Sweet expects utility costs to keep the fed on the path of rising interest rates.
In fact, Powell himself confirmed that there will be “several” additional interest rate hikes.
Some analysts anticipate that the central bank waits for the strength of the labor market to subside in order for wage pressures to ease, before changing its course of action. But so far, unemployment remains at record lows of 3.5%.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, says it’s time for a pause on rate hikes, noting in a tweet on Tuesday that “his (the company’s) work fed) It’s done”.
“They contained inflation expectations,” he said. “Any additional rate increase from the fed from now on it only increases the chance of an unnecessary recession” in the United States, he emphasized.
(Source: AFP)
