The US Federal Reserve (Fed) will have today and tomorrow a difficult equation to solve: At what level to take its reference interest rates to control inflation without dragging the world’s largest economy into a recession?
In March, the Fed cautiously increased interest rates by 0.25 percentage point, the first increase since 2018.
This time, except for surprises, the Federal Open Market Committee (FOMC) will raise rates by half a point, to bring them to a range between 0.75 and 1%, in an effort to contain inflation.
Jerome Powell, president of the Fed, indicated a few weeks ago that this increase of half a point is “on the table”.
Other members of the reserve were more explicit in considering that it is necessary to develop an aggressive policy in the face of unrelenting inflation, in a context of very low unemployment and labor shortages that push wages up.
The discussions will be intense. In addition to the inflationary pressures also fueled by the lockdowns in China, which accentuated the supply problems in the world, growth is slowing down all over the planet.