The head of the Fed, Jerome Powell, left open the possibility of raising the interbank interest rate again in July by 75 basis points.
The Federal Reserve (Fed) which is’ determined to reduce inflation in 2% target“, Today raised the interbank market interest rates by 0.75%, ie the largest interest rate increase since 1994, in an effort to contain inflationary pressures.
With this third consecutive increase in interest rates are now formed in its range 1.5-1.75%.
The Fed also revised its inflation forecast, which it estimates will rise to 5.2% this year (estimated at 4.3% in March) and will raise interest rates again in 2022. It also predicts that Growth in the US will be weaker than expected, at 1.7% instead of 2.8%. Unemployment is estimated will rise to 3.7% instead of 3.5%.
“General economic activity has recovered” After the contraction in the first quarter, the Fed said in a statement issued after its meeting that “unemployment remains low.” But inflation is high, which “reflects the imbalance between supply and demand, which is linked to the pandemic, rising energy costs and, more generally, price pressures,” he added.
The Fed recalls that the invasion of Ukraine and the sanctions imposed “created additional inflationary pressures” and burden global economic activity. In addition, quarantine in China has exacerbated supply chain problems. All of this is slowing down the US economy.
In fact, the head of the Fed, Jerome Powell, left open the possibility of raising the interbank interest rate again in July by 75 basis points.
Powell assured that the Fed has the tools to deal with high inflation and is “determined” to achieve this goal.
