The United States Federal Reserve (Fed) announced on Wednesday an increase in the official interest rate of 0.75 pointsthe sixth consecutive increase since March, in a new attempt to control inflation.
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The US central bank met the expectations of economists and the official interest rate of the world’s largest economy is now at in a range between 3.75% and 4%, the highest level since 2017.
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The Federal Reserve also announced that more “continuous increases” and “a monetary policy that is restrictive enough” to return inflation to its 2% target “will be appropriate”.
“In determining the pace of future increases, the Committee will take into account the cumulative tightening of monetary policy” and the extent to which such tightening “affects economic activity and inflation” as well as “economic and financial developments,” the Fed said in a statement.
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After a two-day meeting, the members of the Federal Open Market Committee of the Fed made this decision, which will be justified in more detail in the next few minutes by the president of the Reserve, Jerome Powell, at a press conference.
Powell already advanced in September, when the regulator announced another increase of three quarters of a percentage pointthat it is appropriate to continue making “more interest rate hikes in the future”, until inflation is controlled and that “at some point, as the monetary policy stance tightens further, it will be appropriate to reduce the rate of increase.
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But in view of the statement it seems that the so-called “terminal rate”, the maximum interest rate up to which one is willing to reach is still far from being reached, since inflation has not yet dropped notably.
According to the latest data published two weeks ago by the Bureau of Labor Statistics (BLS), the year-on-year inflation rate fell for the third consecutive time in September and stood at 8.2%, although the prices of consumption rose four tenths monthly.
These data show that, for the time being, the series of rate hikes that the Fed has been implementing since March is still not having the desired impact on prices.
EFE
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