Search
Thursday, December 01, 2022

USA: the Fed begins its meeting, sharp rate hike in sight

The monetary policy committee of the American central bank (Fed) began a two-day meeting on Tuesday at the end of which should be announced a new sharp increase in its key rate to fight against very high inflation in the United States .

The meeting of the Monetary Policy Committee (FOMC) began at 1:00 p.m. (5:00 p.m. GMT) as scheduled, a spokesman for the Federal Reserve (Fed) told AFP.

Discussions are due to end Wednesday at midday. A press release is expected for 2:00 p.m. (6:00 p.m. GMT), before a press conference by Fed Chairman Jerome Powell, scheduled for 2:30 p.m. (6:30 p.m.).

During this meeting, the Fed must update its forecasts for GDP growth, inflation and the unemployment rate in the United States.

And, for the fifth time since March, it will raise its key rate, in order to slow down inflation. This rate, which currently fluctuates within a range of 2.25 to 2.50%, sets the tone for commercial banks to establish interest rates for their loans to individuals and professionals.

Read Also:  Antibiotic resistance: what WHO warns could be the leading cause of mortality

A third increase of three-quarters of a percentage point (75 basis points) is expected. But the increase could be even stronger: almost one in five market players even expects a one percentage point increase, according to the evaluation of CME Group’s futures products.

Discover the best free bank cards thanks our comparison

The purpose of the rate hikes is in fact to slow down economic activity, in order to ease the pressure on prices, while inflation admittedly slowed down in August thanks to the fall in gasoline prices, but is remains much stronger than expected, 8.3% over one year, with a general rise in prices.

Read Also:  Rio de Janeiro cancels street carnival parade for second year in a row amid Omicron outbreak

This deliberate slowdown in the economy, which will undoubtedly be accompanied by a rise in the unemployment rate, is all the more difficult to carry out as the recession threatens the American economy, and, more broadly, the world economy.

The excellent health of the labor market, however, gives the Fed room to be aggressive, and hope to be able to achieve the soft landing it is aiming for. The unemployment rate in the United States is 3.7%, one of the lowest in 50 years, and there are not enough workers to fill all the vacancies.

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