The US central bank decided to raise the US interest rate by 0.75 percentage points to an annual range of 2.25% to 2.5%. The information was released in a statement this Wednesday (27). fomc of the Federal Reserve (Federal Open Market Committee), fed.
The decision was taken unanimously. The US has raised interest rates for the fourth time this year, and the trend suggested by the Committee is that the rate should increase further at subsequent meetings.
The Federal Reserve also decided to increase the interest rate paid on the reserve balance to 2.4% and the discount rate by 0.75 percentage points to 2.5%, effective tomorrow (28).
Why are you going up? The reason for the increase in interest rates is high inflation. In June, the official rate, taking into account the last 12 months, was 9.1%, the highest rate since November 1981. As a result, food and fuel prices remain high.
According to the Fomc, the supply and demand imbalance associated with the pandemic has been reflected in higher food and energy prices and wider price pressures.
Why does raising interest rates affect inflation? The practice of raising interest rates to combat inflation is based on the assumption that consumption will decrease by making loans and loans more expensive.
However, economists differ on the effectiveness of this measure for the time being, as countries face economic and inflationary challenges, not only at home but also abroad, such as the Ukraine War, the curfew to combat Covid-19. China and the uncertainties of the future in the face of these challenges.
How does this affect Brazil? Greenbay Investmentos chief economist Flávio Serrano says the US decision could also have an impact on Brazil’s inflation.
“There is a process of reducing global demand with higher interest rates,” he says, as higher interest rates make credit more expensive.
Serrano remembers that most of the 10.06% inflation recorded in Brazil in 2021 was “imported” from abroad. In other words, the rise in commodity prices such as oil and food boosted Brazilian inflation.
The classic example is fuels: gasoline rose 47.49% and diesel increased 46.04% last year in Brazil. In the 12-month period until June in 2022, the accumulated inflation in Brazil is 11.89%.
*With Estadao Content
source: Noticias
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