The main guideline rate of the federal Reserve US, which has risen for a year to try to contain inflation, could continue to rise beyond 5.1 percent, the ceiling hitherto expected, hide the president of the central bank, Jerome Powell.
«The latest economic data is stronger than expected, suggesting that the final level of interest rates could be higher than anticipated,» Powell told a Senate committee.
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The Fed will update its economic forecasts on March 21 and 22, during its next monetary policy meeting.
After several sharp rate hikesthe Fed began to moderate the increases, which also continued, seeking to cool the economy by lowering consumption and investment by making credit more expensive.
In their last meeting, on February 1, they returned an increase of a quarter point, a figure considered standard by the market. But according to Powell the trend could change again.
«If all the data indicates that faster tightening is warranted, we would be willing to increase the pace of rate hikes,» Powell told lawmakers.
The rates are located at 4.5-4.7 percent against 0-0.25 percent during the pandemic, when the Fed sought to boost flagging demand.
«Although inflation has moderated in recent months, the process of reduction to 2 percent (the level considered healthy by the Fed, ndlr) will be long,» added the head of the central bank.
The strength of the job market, consumer spending, industrial production and inflation data for January reported a partial reversal of trend, probably due to exceptionally benevolent weather in, Powell risked.
In reaction to comments from Powell, The New York stock market, which opened on hold before this intervention that the head of the Fed will repeat tomorrow before legislators of the House of Representatives, fell sharply.
The Dow Jones industrial index lost 1.72 percent, the Nasdaq technology stock lost 1.25 percent and the S&P 500 was down 1.53 percent at the closing bell. According to the PCE index, the one preferred by the Fed, inflation rose to 5.4 percent in 12 months in January, slightly above the figure for December (5.3 percent).
Meanwhile, the consumer price index (CPI) eased slightly, to 6.4 percent for 12 months in January compared to 6.5 percent in the rolling year ending in December.
However, in the month-to-month comparison, the United States obtained a price increase for the first time since September, of 0.5 percent over the last month of 2022.
The unemployment rate it also shows the strength of the world’s largest economy, standing at 3.4 percent, a minimum in more than 50 years.
one of the Fed Governors Christopher Waller, He ruled Thursday that he would support raising rates to above 5.4 percent in the coming months if inflation does not moderate more quickly and the job market jubilant.
«To restore price stability, we have to see lower inflation in this sector (ndlr: because of wages),» Powell summed up on Tuesday.
Rising wages drive demand and with it price rises. «Man we’ll have the route until the job is done,» she said once more.