He will not only upload them but “soon”. The Federal Reserve of the United States (Fed) confirmed that the strength of the working market and the high level of inflation, well above the 2% target, allows confidence that “early“It is appropriate to undertake an increase in the target band for interest rates. This opens the door for the new upward cycle in the price of money, after being at the 0% level for almost two years, to begin in March, at the same time that asset price comparisons will end, according to analysts.
In the press conference after the Fed meeting, his president, Jerome Powell, was more forceful: “I would say that the committee is in favor of raising tariffs (…) at the March meeting, assuming the conditions are appropriate to do so.” In any case, he reiterated that he was convinced that inflation would decline this year. “We still expect inflation to slow during the year,” he said. In turn, he added that “the engines of the rise in inflation are mainly the disruptions caused by the pandemic.”
After its meeting, the Fed stated in a statement that “with inflation well above 2% and a strong labor market” the agency “expects that it will soon be appropriate to increase the target range for the federal fund rate”. To avoid stock market movements after two days of recovery after a Monday marked by the crisis in Ukraine, the Federal Open Market Committee (FOMC), the Fed body that decides monetary policy, chose to keep the reference interest rate unchanged. in a target range between 0% and 0.25%. At the same time, it confirmed will continue to reduce the monthly rate of its net asset purchases, which will allow them to be completed in early March.
Three or four
In December, the Fed chairman warned that the first rate hike of the three expected could come in the first half of the year. In any case, analysts do not rule out that instead of three, the Fed will eventually apply up to four increases, depending on how inflation develops. The price of money was reduced to 0% in March 2020, due to the crisis caused by the pandemic. The last time the Fed took a similar step was in December 2008, with the financial crisis, and it lasted seven years later.
The Consumer Price Index (IPC) of the US stood at 7% in the mid-year rate last December, which meant an acceleration of two tenths in terms of the figure for November and the highest rate recorded in the country since June 1982. This increase in the general price level has changed. the goals of the Fed, which no longer saw this evolution as something merely circumstantial.
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After a phase of measures to strengthen the recovery after the crisis caused by the coronavirus, comes a new stage characterized by the strategy to avoid overheating of the economy, ie excess inflation leading to the improvement in activity can prune. With the higher price of money, loans to individuals and companies become more expensive, which slows down demand.
The Fed also emphasizes a reduction in supply problems, which should improve the supply of goods and materials and help curb inflation. And that on the same day that a barrel of Brent oil, the reference quality in Europe, hit $ 90 for the first time since 2014 due to fears of interruptions in the supply of Russian gas due to the crisis with Ukraine, another element of uncertainty in the economy.
Reference-www.elperiodico.com