Federal Reserve from the united states did as expected and left this Wednesday without touching interest rates will continue at the same level Varies between 5.25% and 5.5%. it’s about you 22 year high and will continue at least until December 13 is the date of the next Fed decisionIt must decide how and when to act to slow an economy that has so far failed to yield to the pressures of traditionally high-interest monetary policy.
This policy, which was initiated to combat inflation after the pandemic, in just 18 months men will pass from almost zero to exceeding 5% It will reach its current level in July. Normally, something like this would lead to spending cuts and layoffs at companies. But now There is no sign of slowing down in the US economy.
since June the inflation noticeably slowed down and by the Fed’s preferred measure, that rate was reduced to 3.4% in September, down from a peak of 7.1% in the summer of last year. This decline is something that usually happens when economic activity weakens, but last quarter US data released last week shows that economic activity is not only weakening but also strengthening. This quarter was the fifth consecutive quarter of growth by annual percentage growth. economy growth at 4.9%, strongest pace since 2021. The labor market also remains strong: unemployment rate 3.8 percent and there it was Job creation for 33 consecutive months.
Key questions
The real question is how the Fed will react to this response of the economy. fits possibility of a new rise This is something the Fed suggested at its previous meeting in September, when it paused hikes or suggested early 2024. But increase or no increase, sentiment is growing among many analysts that the Fed will raise interest rates. will prefer keeping rates at higher levels for longer effectively slowing down the economy for longer than expected and for as long as necessary, and eventually inflation to 2% desired target. The main question is how long it will take.
Part of the Fed’s hesitation, whose decision came six days after the European Central Bank also put the brakes on raising interest rates for the first time in 15 months. treasury bill market This reacting depends on monetary policy. The price of these long-term bonds has been collapsing, especially in the last two months, which has caused long-term interest rates to rise. more expensive mortgages, loans, loans to buy a car, credit card payments or business investments. This increase in prices has not slowed down the economy visibly for now, but it has begun to be felt more clearly. This will give the US central bank the leeway to not have to raise it further. something like that Jerome PowellThe Fed President also drew attention to this at a conference held in New York last month..
Exactly this Powell’s press conference Answers and statements giving indications of the path the Fed will now follow are expected at 20.30 local time in Washington (another five hours in Spain).