United States: reference rate rises and reaches maximums

The Federal Reserve (Fed) of the United States complied with the forecasts of all analysts and increased its reference interest rate by 0.25 points, a decision that catapulted rates to the scenario of 5% – 5.25%, with maximums who were not warned since 2007, before the great recession.

A run of 10 rate hikes in a year for the Fed is expected to come to an end: four aggressive 0.75-point hikes, two more moderate 0.5-point hikes, and four 0.25-point hikes. However, the head of the US central bank, Jerome Powell, does not think so.

In statements to the press, the official said that the increases could only be cut when the economic data from USAto be known in the coming weeks, are more encouraging.

“The decision on the pause has not been made today. We will address that issue at the June meeting“Powell clarified at a press conference.

Similarly, the statement drawn up by the Federal Open Market Committee of the fed it does not contain any hint that this could be the last rise in the benchmark indices before appeasing the hand, as a deterrent, in the face of the banking instability that still plagues global markets.

inflation still up

Last March, inflation in the US reached 5%, from the peaks of 9.1% that devastated the North American nation in July 2022, thanks in large part to the tightening of the Fed’s monetary policies.

Nevertheless, this range of 5% is still far from the 2% raised as a target, although a separate report also suggested that the labor market may be in better shape than expected. The Fed hammer will depend on it.

“It is likely that credit conditions stricter measures for households and businesses will weigh on economic activity, hiring and inflation,” the document said.

The data

cold cloths The Fed guaranteed that the US banking system “it is solid and resistant“.

Chopped. Wall Street closed with losses after the announcement of the fed: S&P 500 lost 0.7%; Dow Jones, 0.8%; and Nasdaq, 0.5%.