The Fed raises interest rates 25 basis points

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The Federal Open Market Committee (FOMC) of the United States Federal Reserve (Fed) has decided to unanimously approve an increase in the country’s interest rates of 25 basis points, until placing them in a target range between 4.50% and 4.75%, as reported this Wednesday.

“Updated indicators point to a slight increase in spending and production. Job creation has been robust in recent months and the unemployment rate has remained low,” the Fed has indicated. However, it has warned that “inflation has moderated, but remains high.” In addition, he has pointed to Russia’s war in Ukraine as a factor of global uncertainty.

The US monetary authority has predicted that more interest rate hikes will still be necessary to subdue the rise in prices. When determining its rise, the progressive tightening of monetary policy, the “delayed effects” of monetary policy on economic activity, inflation and the financial sector will be taken into account.

On the other hand, the balance sheet reduction plans remain unchanged, reinvesting the principal of the debt that matures, with the exception of 95,000 million dollars each month, between Treasury bonds and mortgage securities.

UNEMPLOYMENT AND INFLATION

The US labor market created 223,000 jobs last December. On his side, unemployment fell two tenths to 3.5%, according to the Labor Department’s Bureau of Labor Statistics.

In this way, unemployment recovers the minimum level reached before the pandemic and which, also, was its lowest rate in several decades.

The country’s economy experienced growth of 0.7% of its GDP in the fourth quarter and 2.1% in the whole of 2022, the Bureau of Economic Analysis (BEA) has revealed.

Likewise, the personal consumption spending price index, the variable preferred by the Fed to monitor inflation, stood at 5% year-on-year last December and five tenths less than the previous month. The monthly rate registered an expansion of 0.1%, without changes compared to the previous month.

The underlying variable, which excludes energy and food prices from its calculation due to their greater volatility, stood at 4.4%, three tenths less.