The Federal Reserve of the United States (FED, in its acronym in English) raised its key rates this Wednesday in a quarter of a percentage point. Furthermore, he anticipated that he expects new hikes after this one eighth consecutive risein the face of inflation that is moderating in the country governed by Joe Biden but which, in their opinion, “remains high”.
With this update, the Fed rates have been met a range of 4.50-4.75%. “Recent indicators show moderate growth in spending and output,” the Fed’s Monetary Policy Committee (FOMC) noted in a statement after its first two-day meeting of the year.
“Recent indicators point to subdued growth in spending and output. Job creation has been strong in recent months and the unemployment rate has remained low. Inflation has fallen slightly but remains high,” the committee diagnosed. in a note, in which he pointed to the Russia-Ukrainian War as one of the reasons for the situation.
The objective of the “restrictive” policy, they stressed, is “to achieve maximum employment and an inflation rate of 2 percent in the long term”.
Finally, they specified that to determine the size of future hikes they will take into account the accumulated tightening of monetary policy, the time needed to see the impact of such policy on the economy and inflation, and economic and financial developments.
“Although recent developments are encouraging, we will need much more evidence to make sure inflation stays low,” Federal Reserve chairman Jerome Powell said at a news conference.
This increase – expected on what has been called “super Wednesday” – implies the continuity of the tightening of monetary policy, after last December the entity raised rates by around 50 basis points.
Tight monetary policy and its impact on inflation in the United States
The restrictions had been inaugurated in March, with a first increase of 25 points at rates close to zero, to revive the economy after the coronavirus pandemic.
In the midst of Russia’s invasion of Ukraine, the Federal Reserve raised its rate by 50 points in May. He subsequently applied raises of 75 points four consecutive times.
Thus, after hitting a 40-year high of 9.1% last June, annual inflation in the United States began to moderate and was 6.5% last December, after the sixth consecutive decline, a given that according to analysts it is a sign that the rate increases are beginning to have an effect on the national economy.
With information from AFP and EFE
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Source: Clarin
