Monday, November 28, 2022

US Federal Reserve hikes interest rates by 75 points

The Federal Open Market Committee of the United States Federal Reserve (Fed) has unanimously decided to approve a third consecutive increase in the country’s interest rates by 75 basis points, as long as they remain within a target range of between 3 percent and 3.25 percent. is not retained, as reported. on Wednesday.

This represents the highest value for money the country has recorded since January 2008, a few months before the crisis that year began with the bankruptcy of Bear Stern and Lehman Brothers.

“The war and related events are adding to inflationary pressures and impacting global economic activity. The Committee is closely monitoring inflation risks,” the FOMC said.

The US Monetary Authority has again predicted that it would be “appropriate” to raise interest rates further in future meetings.

On the other hand, the balance sheet reduction plan remains unchanged. Between June and August, the decrease was at $47,500 million a month, while it has increased to 60,000 million since this month.

The Fed, on the other hand, publishes its macroeconomic forecasts as well as the projections of its members on interest rate developments.

The ‘dot-plot’ or point diagram has been extensively revised compared to June. In the sixth month of 2022, most FOMC members expected rates to be between 3 and 3.5 percent at the end of 2022. Now, though, everyone expects them to close the year at least above 4 percent. Looking beyond 2023, most central bankers keep the value of money above 4.5 percent.

Read Also:  WATCH: Biden Commenting on White House Efforts to Strengthen National Supply Chains

The central projection of the issuing institution shows interest rates will be between 4.1 and 4.4 percent in 2022, compared to between 3.1 and 3.6 percent projected in June. For 2023, bankers forecast a range between 4.4 and 4.9 percent, compared to a range between 3.6 and 4.1 percent three months ago.

With regard to macroeconomic developments, the Fed has worsened its outlook. Thus, it has reduced the country’s GDP growth to 0.2 per cent in 2022 as compared to 1.7 per cent projected in June. At the same time, the growth forecast for 2023 has been reduced by five tenths to 1.2 percent, while for 2024, two tenths has been reduced to 1.7 percent.

With regard to unemployment, the Fed estimates the country will close out the year with an unemployment rate of 3.8 percent, a tenth higher than the estimate three months ago. In 2023, unemployment will be 4.4 percent, which is five tenths higher.

Read Also:  First 4 Venezuelans reach US to benefit from new humanitarian parole

The US labor market created 315,000 non-farm jobs last August. On the other hand, unemployment rose by two tenths to 3.7 percent, thus the recovery of labor was sustained.

The country’s economy experienced a contraction of 0.1 percent of its GDP in the second quarter, according to the second estimate of data released by the Government Economic Analysis Office.

Similarly, the price index for personal consumption expenditure, the Fed’s preferred variable for monitoring inflation, was up 6.3 percent in July last year compared to the same month last year, five-tenths lower than the previous month. The monthly rate registered a contraction of 0.1 per cent as compared to an increase of 1 per cent in the previous month.

The underlying variable, which excludes energy and food prices from calculations because of their greater volatility, was 0.1 percent, five-tenths lower than in June, while the annual rate fell to 4.6 percent, one-tenth lower.

Nation World News is the fastest emerging news website covering all the latest news, world’s top stories, science news entertainment sports cricket’s latest discoveries, new technology gadgets, politics news, and more.

Latest News

Related Stories