The Federal Reserve ratified the half -point rate increase in June and July

The Fed confirmed what the next steps are to try to reduce inflation in the United States: two half-point rate hikes for next month and for July. In this way, the financial authority confirmed its path and dispelled any doubts investors may have about the short -term global scenario. Wall Street stocks, which started the day higher, responded with gains.

The Federal Reserve has published minutes of its last monetary policy meeting last May 4, which indicated that the organism was directed to further tighten its measures to attack inflation, and speaks of renounce its “neutral” position to face a “strict” policy.

“A strict policy stance may be appropriate depending on the evolution of the economic outlook and the risks to it,” the minutes said.

As Fed Chairman Jerome Powell previously explained, “neutral” policy seeks to achieve a “soft landing”, that is, to lower inflation without the economy experiencing a recession. In this way, the organism It will repeat the last rate adjustment, by 50 key points, and try a similar increase again in July.

On this path, US interest rates could end up between 2.5% and 2.75% by the end of the year. However, the market does not exclude that if the Fed decides to further tighten its stance up to 3% per year in December.

The agency also repeated that to reduce liquidity will begin in June to reduce your bond balance, which reached $ 9 trillion during the flexible policy it applied during the pandemic. Sales of this paper will increase from 47.5 billion per month in June and July to $ 95 billion per month in August.

The minutes expressed concern on the part of some officials regarding the impact of the measures to be taken for various sectors of the economy.

“Some participants commented on financial stability and noted that monetary policy restrictions could interact with weaknesses related to the liquidity of Treasury securities markets and the intermediation capacity of the private sector,” the minutes indicates.

“Participants consider it important quickly move towards a neutral monetary policy. They also indicated that a strict policy is something that may be appropriate, ”the minutes said.

And while some Fed officials said the data began to indicate that inflation “may have stopped worsening,” the consensus is that es “too early to be confident that inflation will rise.”

On May 4, the Fed announced a half-point rate increase, the largest in more than two decades, since the last time the U.S. central bank announced an increase of this magnitude was in 2000.