Jakarta, CNBC Indonesia – The final reading of economic growth in the United States (US) was recorded as still experiencing contraction or negative growth, in the midst of rising inflation which led to aggressive actions from the central bank The Federal Reserve/The Fed in raising its benchmark interest rate which could cause a slowdown in expansion and recovery.
The final data on the economic growth of the Uncle Sam country in the first quarter of 2022 was recorded at minus 1.6% on a quarterly basis or still in the contraction zone. This figure is lower than the previous quarter which grew by 6.9%.
The US economy has slumped sharply since 2021 as the Fed’s stimulus program ended. Then inflation ran rampant and cut consumer spending and corporate incomes. Coupled with rising energy prices, exacerbated by the Russian attack on Ukraine since February 2022.
The World Monetary Fund (IMF) also revised its forecast for the US economy in 2022 to 2.9% from the previous 3.7%. The IMF also said the US’s chances of avoiding a recession were getting narrower.
“We are aware that there is a narrow path to avoiding a recession in the US,” said IMF Managing Director Kristalina Georgieva.
Even more, Fed Chair Jerome Powell’s statement did not hesitate to ‘sacrifice’ the economy in order to achieve its goal of reducing inflation could be a driver of recession.
There is potential The Fed’s aggressive action in raising its benchmark interest rate could lead to a slowdown in expansion and recovery.
Georgieva said the onus to restore low and stable inflation lies with the Fed. The IMF views the US central bank’s desire to immediately raise its benchmark interest rate overnight to a level of 3.5-4%.
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