Fed hikes its rates by 0.75% and expects almost zero growth in US GDP

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The United States Federal Reserve (Fed) on Wednesday announced an official interest rate hike of 0.75 points, the fifth increase since March and the third three-quarter increase of one point in a row, in a new effort to control inflation. .

The US central bank met economists’ expectations and the official interest rate for the world’s largest economy is now between 3% and 3.25%, the highest level in the past 14 years.

The Fed now expects US GDP growth to be near zero in 2022 (+0.2%), compared to a 1.7% forecast in June.

After a two-day meeting, members of the Fed’s Federal Open Market Committee made the decision, which will be justified in a press conference by Reserve Chairman Jerome Powell in the next few minutes.

Powell had already predicted last July, when he announced the previous hike, that another “unusually large increase” in rates would likely take place in September, a prediction he would make again in his latest public speeches. are confirming.

At various public events in recent weeks, he has emphasized the need for the Fed to continue a restrictive monetary policy to lower prices and prevent citizens from getting used to high inflation, which stood at 8.3% in August.

“We must now act clearly, forcefully, as we have been doing, and we must continue to do so until the work is done,” he said in a recent conversation.

The increase comes a week after the latest inflation figures were released, which showed that, although the year-on-year rate of the CPI fell by two tenths to 8.3% in August, monthly prices were lower than in July. increased in tenths.

Data shows that, for the time being, the series of interest rate hikes that the Fed has been implementing since March is still not having the desired effect on prices.

EFE



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