US: Another 0.50% interest rate hike by the Fed

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The benchmark rate now stands at 4.25%-4.50%, the highest level since 2007

The US central bank (Fed) today announced an increase in interest rates by 50 basis points, confirming analysts’ forecasts for an easing of its aggressive policy aimed at containing inflation.

The benchmark rate is now set at 4.25%-4.50% (the highest level since 2007), the Fed said in a press release after the meeting, in which the decision was taken unanimously. At the same time, he announced further increases in the coming months.

The slowdown in the rate of interest rate growth, however, marks the beginning of a new phase in the fight against inflation, which has been a priority of the Fed for months.

Faced with rising prices to their highest level in 40 years, the Fed had made four consecutive rate hikes of 75 basis points.

However, it now appears less optimistic than it did in September about the path of US inflation, forecasting it to slow to 3.1% in 2023 when it recently forecast it would reach 2.8% next year.

Fed officials on hand revised their forecast for the growth rate of the US economy in 2023: 0.5% instead of 1.2% they estimated.

As for the unemployment rate, they predict it will increase to 4.6% in 2023 from 3.7% today.

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