Thursday, June 8, 2023

Fed prepares for sixth consecutive hike in US interest rates. financial journal

federal Reserve The US (Fed) concluded its monetary policy meeting on Wednesday After which A. expected to announce increase in interest rates, Sixth in a row that the market expects 75 basis points.

Members of the Fed’s Federal Open Market Committee began their November meeting on Tuesday after which they are expected to announce a new hike in interest rates, which they intend to continue to control inflation.

according to experts, growth will again be 0.75% And with it the US central bank will make a series of six consecutive increases since March, when the regulator decided to initiate action to stem the rise in prices that began as a result of the pandemic and global supply chain failures.

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If the forecasts are fulfilled, the world’s largest economy would have an official interest rate of between 3.75% and 4%, a rate not seen since 2007.

At the last meeting in September, the chairman of the Fed, Jerome Powell, has already gone on to say that the reasonable thing to do is to continue to “raise interest rates further in the future”. It would be appropriate to slow down the rate of growth until inflation is under control and “at some point, as the monetary policy stance tightens further.”

But everything indicates that what is known as the “terminal rate”, the maximum interest rate one is willing to reach, is still far from being reached, as inflation has not yet decreased significantly.

According to the latest data released by the Bureau of Labor Statistics (BLS) two weeks ago, The year-on-year inflation rate fell for the third time in a row in September and stood at 8.2%, However, consumer prices increased by four tenths monthly.

Following the Fed meeting in September, the regulator itself unveiled its economic forecasts, which, among other things, consider an interest rate of 4.4% through the end of 2022.

By the end of 2023, they expect rates to rise slightly to 4.6% before falling to 2.9% by the end of 2025.

These projections do not represent a road map, as central bank decisions will depend on the growth of the economy and the effects of a return to more restrictive monetary policy on inflation.

Nation World News Desk
Nation World News Desk
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