The president of the American central bank announced on Wednesday a third consecutive increase of 0.75 % of its guiding rates. Growth should fall at + 0.2 % this year.
The American Federal Reserve (Fed, Central Bank) again increased its rates on Wednesday, September 21, and it is not over. It decided on a third consecutive increase of 0.75 points of its guiding rates, fixing the rent of money in the short term in a range between 3 % and 3.25 %. This is the highest level since 2008, at the start of the great financial crisis.
During its November and December meetings, the monetary institution should, according to its own forecasts, still tighten the credit of the credit of 1.25 points. Ultimately, in 2023, the rent for money should exceed 4.5 %. The flight is spectacular: the rates were still almost zero in March since the start of the Cavid-19 pandemic. This probable hardening is 1.2 points above the June forecasts.
“We will continue until we are convinced that work is done,” warned the president of the Fed, Jerome Powell. Thus, the idea that it is possible to fight inflation, which has been at its highest level for forty years, having increases in minor rate is definitively dead.
The Fed seems ready to take the risk of a recession. “The chances of a smooth landing is likely to decrease insofar as the policy must be more restrictive. But a failure to restore prices stability would lead to greater pain later, said Powell. No one knows If this process will lead to a recession or, if this is the case, what will be the importance of this recession. “According to the central bank, growth should fall to + 0.2 % this year and + 1.2 % In 2023 (against + 1.7 % each year during its June estimate) while the unemployment rate should go up to 4.4 % of the active population in 2023 and 2024, while it is close to the lowest historic (3.7 %).
The Fed determined to combat inflation
This hardening of your explanations. First, inflation is much more encrusted in the American economy than the Fed hoped for. The figure for August has the effect of a cold shower: certainly, the price increase over one year fell to 8.3 % against a maximum of 9.1 % in June, but this phenomenon s’ Explains by the drop in fuel prices – the price of the Gallon fell from $ 5 in mid -June to 3.68 dollars. This reflux can only mask the food continues to increase as well as the accommodation, the first post of the index, up annual increase of 6.2 %.
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