The United States Federal Reserve (FED) increased the reference rate by half a percentage point to 4.25-4.50%the agency reported at the end of its last meeting of the year.

The decision came following his increase in inflation forecasts for the US economy for 2023, which will take its rates above 5%.

This is the seventh consecutive rate hike since Marchthough it’s more subdued than the last four, which were by 0.75 points.

In its statement, the Fed’s Federal Open Market Committee also anticipated that new rate hikes “will be appropriate” in the future to continue helping to keep prices down and bring the inflation rate back to its 2% target.

what’s coming

To decide the pace at which these future increases will take, the committee will take into account the effects that this restrictive policy is having on economic activity and inflation.

In any case, he has already stressed in his statement that job creation continues to be solid and the unemployment rate remains lowand sees modest growth in both spending and activity.

He also believes that inflation remains high as a reflection of the imbalances still linked to the pandemic and the supply chain, as well as increases in food and energy prices due to “pressure” from outside.

“The committee will be ready to adjust its monetary policy to be consistent with the risks that may arise and which can hinder the objectives” of this body, continues the note.

The year-on-year inflation rate in the US continued to decline and in November stood at 7.1%6 tenths less than in October, according to data released Tuesday by the Bureau of Labor Statistics (BLS).

When the Fed announced its fourth consecutive 0.75-point hike last November, Powell believed there was still room to get inflation back to its 2% target without triggering a recession.

In light of the latest unemployment data, the restrictive monetary policy of the Fed does not affect the job market is still strong.

And is that unemployment in the United States did not register changes in November and the rate remained at 3.7%, or about 6 million people.

263,000 new jobs were created that month, 2,000 more than in October.

Source: AFP and EFE