The FED has just unveiled its main key rate. The latter has just experienced a rise of a quarter of a percentage point, which is the largest ever recorded since 2001. Now, it fluctuates between 5.25 and 5.5%.
The 11ᵉ increase recorded since March 2022
On July 26, 2023, the Federal Reserve FED once again spiked the key rate, in an effort to put an end to inflation. A decision voted by the eleven members of the monetary policy committee (FOMC) unanimously.
As a reminder, this is the 11th increase since March 2022. Although the increases are likely to continue in the coming months, the FED has not announced any new increases for the moment. .« The committee will continue to assess additional information and its implications for monetary policy. “, can we read on his press release.
A policy that seems to have a positive impact on inflation
Although the increase in the key rate carried out by the FED will be followed by an increase in interest rates for loans made by professionals and individuals, this will have a positive impact on the inflation rate. Indeed, the latter fell in June to reach its lowest level recorded since March 2021. This monetary strategy therefore seems to be effective. Regarding underlying inflation, it has remained stable at a rate of 4.8% for a year.
However, the FED is counting on other devices, like the PCE index, the figures of which will be shared on Friday, July 28, 2023. On the other hand, the chairman of the FED, Jerome Powell, affirms that further increases are in prospect. “At least two, possibly in a row”, he specified. In addition, the majority of Fed officials agreed at the last meeting to raise the main policy rate to a range of 5.5 to 5.75%.
A growth forecast estimated at 2% for the American GDP
In an effort to promote economic activity through consumption, Fed rates were at 0% until March 2022. From then on, faced with inflation, the U.S. central bank had no no choice but to drive up loan rates, until they reach their highest level recorded in 40 years.
Furthermore, the growth of GDP US is expected this year at a rate of 2% for this 2nd quarter. Consequently, the new rates of employment, growth or inflation will be decisive. According to International Monetary Fund (IMF)the United States will have to grow by 1.8% this year.
2023-07-29 09:27:41
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