Inflation in the United States is low and the FED maintains reference rates

Inflation in the United States continues to moderate and according to the Bureau of Labor Statistics (B.L.S.), for November it registered a rate of 3.1%, which represents one tenth below October.

For its part, the underlying inflation rate, which measures the rise in prices without counting energy or food, and which is also one of the indicators analyzed by the Federal Reserve (FED) to make its monetary policy decisions, It rose three tenths in monthly terms and stood at 4% annually.

Regarding the labor market, for the eleventh month of the year, 199,000 jobs were created in the world’s leading power, which represents 49,000 more than those generated a month ago.

Rates remain the same

These positive results for the United States were reflected in the decision of the Federal Open Market Committee of the Fed, which decided to keep interest rates between 5.25% and 5.5% for the third consecutive time, their highest level since 2001.

This too marks the third consecutive breakafter 11 consecutive increases by the entity.

Jerome Powell, president of the Fed, asserted that the US economy will continue to be evaluated and if it does not evolve as expected, monetary policy will be adjusted accordingly, even if that means new cuts or increases in interest rates.

“Inflation has declined over the past year, but remains above our long-term goal of 2%,” Powell stated.

Projections

For half of the Fed governors The forecast is that interest rates will end up at 4.6% in 2024.which is equivalent to a range of 4.5% and 4.75%, to be cut in 2025, to 3.6%, and by 2026 to reach 2.9%.

This result would indicate that the majority of its members believe that there will be declines during 2024. A fact that Powell also reinforced by pointing out that “we are probably close to the maximum rate of this cycle.”

It should be noted that the Fed committee also reported that any additional measure to return inflation to the target will take into account the cumulative tightening of the monetary politics and the evolution of the American economy.

Meanwhile, on Wall Street, stocks soared on the prospect of lower rates, and bond yields fell after the forecast of three cuts for next year.

Janet Yellen, Secretary of the Treasury of the United States, specified that the market turbulence has calmed and that there is no “significant uptick” in layoffs. However, unemployment was estimated to rise to 4.1% in 2024 from its current 3.7%.

European Central Bank will not lower rates

The European Central Bank (ECB) has maintained its interest rates at 4.5% and has cooled market expectations regarding possible reductions.

Christine Lagarde, president of the ECB, indicated that the Governing Council considers that with current rates it will be possible to reach the 2% inflation objective in the medium term.