FED raises the interest rate in line with expectations

The United States Federal Reserve (FED) announced this Wednesday, February 1, 2023 the eighth consecutive increase in interest rates, a rise of 0.25 points, which confirms a slowdown in increases. With this increase, less than the previous increases, the rate went from 4.5% to 4.75%, the highest figure since September 2007.

“Continuous increases will be appropriate to achieve a monetary policy stance that is restrictive enough to return inflation to 2%,” said the US central bank in a statement acknowledging that this rate “has fallen somewhat, but continues to being elevated”.

To determine the extent of future hikes, the Fed added, cumulative tightening of monetary policy will be taken into accountthe time it takes to see the impact of said policy on the economy and inflation, and economic and financial developments.

The decision was announced after the two days of meeting held by the members of the Federal Open Market Committee of the FED (FOMC), who voted unanimously.

In March 2022 the increases began

To try to put a stop to inflation, the FED began the increases in March 2022 with a timid 0.25. In May, it raised rates by 0.5 points and in June it began a series of increases of 0.75 integers, before going back down to 0.50 last December.

Since it reached its peak in June (9.1%), inflation has eased to 6.5% and in December it fell for the sixth consecutive month, a figure that according to analysts is a sign that the rate hikes are beginning to have an effect on the US economy.

However, from the Fed they have continued to insist that they will not stop until a monetary policy is reached that is sufficiently restrictive to return to 2% inflation.

With information from EFE.