Federal Reserve from the united states decided do not change interest rates in their last meeting, just as in the previous three meetings. He left them there this Wednesday. Varies between 5.25% and 5.5% what are they in From July 2023.
With this expected decision, the focus returns to the subject again, and if possible, more intensely than before. When The US central bank can do this start dropping them. These calculations began to increase rapidly after the previous Fed meeting. When is December? Most members of the US central bank’s monetary policy committee had predicted three interest rate cuts this year. expectations have cooled a bit from those who will wait for this The cuts will begin after the next meeting in March.
“The committee does not expect that it would be appropriate to reduce the target range.” more confidence in which inflation move forward in a sustainable way %2″, Yes, it says in the document that the references that leave the door open for further increases have already been eliminated.
Moreover Jerome Powell, The Fed President tried to manage expectations at the press conference he held after the meeting. And he took pains to reiterate that before the downturns come, they need to reassure themselves that the fight against inflation is on the right track. “Already We are confident, we are looking for moreReferring to the good inflation data in the USA in the last six months, he said: See better data, not better“. He also stated: to worry Inflation is not accelerating again, but rather continuing Stuck somewhere above 2 percent target
In this context, this is the period when Powell was extremely cautious about the possibility of starting interest rate cuts in the near future. He spoke in front of journalists “sometime this year”, Although he acknowledged that “the economy and the labor market have normalized” in general terms, he stated that economic prospects remained “uncertain” and that “ready to continue plus this range (existing species) if appropriate“. He then directly stated that a decision to introduce cuts at the next meeting in March seemed unlikely.
Success and risks of the fight against inflation
Six months ago, the US Federal Reserve put the brakes on. aggressive raise policy types, Fastest in 40 yearsIt was introduced almost two years ago to combat hyperinflation, which has reached a four-decade high. with these 11 increase since March 2022 I am carrying The price of money is at its highest level in 23 years.
It was a strategy without which risks but it seems to give fruits. inflation United States of America falling faster It was above expectations and remained below 3% for the first time since 2021. Also flashes are starting to happen Shedding light on indicators of consumers’ sense of trust. The labor market is normalizing. And at the same time the economy continued to grow, 3.1% on an annual basis in the last quarter from last year, Although this situation raises fear This Companies are increasing prices again.
Although the long awaited “soft landing” in order to avoid recession looks achievable, Fed continues to move forward leaden feet. Although Powell declared this Wednesday that “to leave the economy behind pandemic”, also reminded this Wednesday: ““There is a long way to go” to achieve victory In terms of “soft landing”. “We’re certainly encouraged by the progress, but we’re not claiming victory at this point,” he said.
This is a known warning. Because although interest rate cuts are predicted, those responsible for monetary policy do not want to rush, as Christopher Waller, a member of the Fed board of directors, said recently (““We can take the time to make sure we do this right.” Powell’s tone of voice and the message he gave to the press were also underlined.