The Federal Open Market Committee (FOMC) of the United States Federal Reserve (Fed) has decided this Wednesday to unanimously approve a rise in the country’s interest rates of 25 basis points, to place them at a target range of 5.25% to 5.50%, its highest level since January 2001.
In this way, the US central bank resumes the path of tightening its monetary policy after the pause adopted at the June meeting, after ten consecutive rate hikes, extending to eleven increases in the price of money undertaken since the sequence began in March 2022.
“The Committee will continue to assess additional information and its implications for monetary policy,” the central bank has indicated, which, to determine the degree of additional policy tightening that may be appropriate to return inflation to 2% over time, ” It will take into account the cumulative tightening of monetary policy, the lag with which monetary policy affects economic activity and inflation, and the development of economic and financial factors.”
In assessing the appropriate monetary policy stance, the Fed Committee has ensured that it will continue to monitor the implications of incoming data for the economic outlook.
In this way, the institution has stressed that the Committee would be prepared to adjust the monetary policy stance “as appropriate” if risks arise that could prevent the achievement of the objectives.
In this regard, the entity has highlighted that recent indicators suggest that economic activity has been expanding at a moderate pace, while job creation has been solid and the unemployment rate has remained low, although “inflation continues elevated”.
Likewise, the central bank has highlighted that the US banking system “is solid and resilient”, considering that tighter credit conditions for households and companies are likely to weigh on economic activity, contracting and inflation, although it has admitted that the extent of these effects “remains uncertain”, so it will remain very attentive to inflation risks.
The quarter-point rise announced this Wednesday, discounted by the market, leaves investors awaiting the possible clues that the Fed Chairman, Jerome Powell, may offer at the press conference that he will offer after the announcement of the decision. of the Committee and given the signs of disinflation that the macroeconomic data are beginning to show.
The consumer price index (CPI) in the United States stood at 3% year-on-year in June, with a moderation of one percentage point compared to May, in what represents the smallest rise in prices since March 2021 .
On its side, the underlying index, which excludes food and energy prices from its calculation due to their greater volatility, closed the sixth month of 2023 with a year-on-year increase of 4.8%, five tenths less than the previous month.
Regarding GDP, the world’s leading economy grew by 0.5% in the first quarter of 2023 compared to the last three months of last year, one tenth below the expansion registered in the fourth quarter of 2022.
