At its meeting on the last Wednesday of this year, the Federal Reserve Bank of the United States (Fed) said, raise the price of money by 0.50 pointslocated at 4.25% to 4.50% range. According to the statement from the US monetary authority, this increase, which took place on the 7th of the year, “is appropriate to reach a sufficiently restrictive monetary policy stance. bringing inflation to 2% over timeanyone”.
0.50 point new increase Largest cumulative increase in a fiscal year since 1980Although at a weaker rate than the last four increases of 0.75 points. In total, during the current year, the Fed has hiked in seven of its eight meetings in 2022.
The current level of money price is the highest since December 2007, a few months before the financial crisis broke out. The Fed states that “recent indicators point to suppressed growth in spending and production.” In every situation, job creation “solid” in recent months and unemployment rate “remains low, but” inflation It remains high, reflecting the supply and demand imbalances associated with the pandemic, rising food and energy prices, and broader price pressures.”
The US monetary authority recalls that Russia’s war against Ukraine has “caused enormous human and economic difficulties” and has turned into “upward pressure on inflation”, affecting “world economic activity”. In this sense, he thinks it would be “appropriate” to make new increases in the next meetings. The agency stresses that it is ready to “adjust its monetary policy stance appropriately if risks arise that may prevent the achievement of its targets.”
The central bank of the world’s leading power confirms that it will take into account “cumulative tightening of monetary policy, delays in monetary policy’s impact on economic activity and inflation, and economic and financial developments” when determining the pace of future rate hikes. . The organization, headed by Jerome Powell, said in a statement, “It is determined to bring inflation back to its 2% target.“.
predictions
fed as well published an update of its macroeconomic forecasts and the price of money. In the ninth month of the year, most of its members were expecting rates to be between 4.50% and 5% by the end of 2023. But now, a large majority expect them to close the year by at least over 5%. Looking at the year 2024, there is a clear distribution between those who expect the price of money to be around 5% and those who predict it to be close to 4%.
Regarding macroeconomic developments, Fed worsens outlook. Thus, the country’s GDP growth, which was estimated at 0.2% in September, increased to 0.5% in 2022. Again2023 forecast reduced by seven-tenths to 0.5%By 2024, it was reduced by one-tenth to 1.6%. Regarding unemployment, the Fed forecasts that the country will close the year with an unemployment rate of 3.7%, one-tenth below the forecast three months ago. In 2023, unemployment will be 4.6%, or two-tenths higher. Adjustment in 2024 was similar, unemployment was 4.6%.
The latest data on inflation in the US fell slightly to 7.1% in November and seemed to put the Fed between hard and hard. despite the moderate rise The increase in the general price level is still far from the 2% target, which has led to a further increase in interest rates.. But there is also the danger of cooling economic growth.
In any case, experts calculate that the bullish cycle could end the coin’s price by about 5%. Last month, the Federal Reserve approved the fourth consecutive rate hike since June, placing interest rates in the range of 3.75% to 4%.