MADRID, 5 Jul. (EUROPA PRESS) –
Within the Federal Open Market Committee (FOMC) of the United States Federal Reserve (Fed) there were discrepancies on the decision to keep interest rates unchanged between 5% and 5.25%, as can be seen from the minutes of its last monetary policy meeting, held on June 23 and 14.
“Almost all the participants considered it appropriate or acceptable to maintain the target range of the federal interest rate between 5% and 5.25%,” reads the document published this Wednesday.
However, it acknowledges that “some” participants were inclined to raise the rate “or would have supported such a proposal” if it were on the table. Harder-liners said core non-residential inflation revealed “little indication that inflation has slowed in recent months.”
Even so, all FOMC members agreed that inflation was “unacceptably high” and that it was declining “slower than expected.” In this sense, they indicated that there was a “clear probability” of additional increases “in the following meetings.”
In addition, the Fed has made an x-ray of the country’s economy, noting that it grew at a “modest” rate during the second quarter of the year. In fact, a “majority” of the FOMC members agreed that growth would remain “subdued” for the rest of the year.
The issuing institute has warned that the cumulative effect of the rate increases has contributed “considerably” to more restrictive financial conditions and a drop in demand in the sectors most sensitive to rates, especially in business and real estate investment.
On the other hand, the labor market “continued” tight and the banking sector “solid and resilient”, since financial tensions have largely dissipated since the collapse of Silicon Valley Bank (SVB) and Signature Bank in March.
Likewise, the forecast of a “mild recession” in the second tranche of this year is maintained as a result of financial and credit conditions. This contraction will be followed by a “moderate” economic recovery.
On June 14, the Fed decided to keep interest rates in a target range of between 5% and 5.25% after the ten consecutive increases in the price of money since March 2022.
However, the US authority warned that it remained committed to returning inflation to the 2% target in the long term, but that it would pause to “gather additional information” on the consequences of its monetary tightening policies on the economy.
