As the U.S. unemployment rate hit its lowest level in 53 years last month and optimism about the U.S. economy spread, concerns over a prolonged period of high-intensity tightening from the Federal Reserve are growing.
Raphael Bostic, president of the Federal Reserve Bank of Atlanta, told Bloomberg News on the 6th (local time) that if the economic situation is better than expected, “we will have to do a little more”. It means we may have to raise more.”
At the end of last year, the Fed had presented the median rate forecast for the end of this year at 5.1% (5.0-5.25%). President Bostic has set the benchmark to maintain the 5.1% level until next year according to the median of the Fed’s forecast, suggesting that it may be raised by an additional 0.25 percentage point.
At the Federal Open Market Committee (FOMC) meeting earlier this month, the Fed carried out a 0.25 percentage point hike, returning to ‘normal speed’ from high-intensity tightening in 11 months. However, according to the overheating of the US labor market, President Bostic added that there is a possibility of increasing the increase again to 0.5 percentage points.
The U.S. added 517,000 new jobs last month, more than tripling expectations and the unemployment rate at 3.4%, the lowest level since 1969. Analysts say that this suggests the strong resilience of the US economy, creating an economic environment in which the Fed can be more active in raising interest rates.
Goldman Sachs lowered the probability of a US recession in the next 12 months from 35% to 25% as the US economy is showing unexpectedly strong resilience. U.S. Treasury Secretary Janet Yellen also appeared on ABC Good Morning America and asserted that “the U.S. economy is light” and “there will be no recession.” Previously, the International Monetary Fund (IMF) raised its economic growth forecast for this year to 1.4 percent, 0.4 percentage points higher than last October’s forecast, saying that the US inflation slowdown has become clear.
New York =
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.