The Federal Open Market Committee (FOMC) of the United States Federal Reserve (Fed) has unanimously decided to approve a third consecutive rise in the country's interest rates of 75 basis points, to place them at a target range of between 3% and 3.25%, as reported on Wednesday.
This represents the highest price of money recorded by the country since January 2008, a few months before the crisis of that year was triggered with the bankruptcies of Bear Sterns and Lehman Brothers.
"The war and its related events are causing further upward pressure on inflation and are affecting global economic activity. The Committee is keeping a close eye on inflation risks," the FOMC said.
The US monetary authority has predicted again that it will be "appropriate" to undertake further increases in interest rates in future meetings.
On the other hand, the balance sheet reduction plans have remained unchanged. Between June and August, the reduction was at a rate of 47,500 million dollars per month, while since this month it has risen to 60,000 million.
On the other hand, the Fed has also published the update of its macroeconomic forecasts, as well as the estimates of its members on the evolution of interest rates.
The 'dot-plot', or point diagram, has been modified in a bulky way compared to June. In the sixth month of 2022, most FOMC members expected rates to be between 3% and 3.5% at the end of 2022. Now, however, everyone expects that they will at least close the year above 4%. Looking ahead to 2023, most central bankers place the price of money above 4.5%.
The central projection of the issuing institute indicates that interest rates will be between 4.1% and 4.4% in 2022, compared to the range of between 3.1% and 3.6% estimated in June. For 2023, bankers anticipate a range of between 4.4% and 4.9%, compared to the range between 3.6% and 4.1% three months ago.
Regarding macroeconomic developments, the Fed has worsened its outlook. Thus, it has reduced the country's GDP growth to 0.2% in 2022, compared to the 1.7% estimated in June. On its side, the growth forecast for 2023 has been reduced by five tenths, to 1.2%, while that of 2024 has been reduced by two tenths, to 1.7%.
With regard to unemployment, the Fed estimates that the country will close the year with an unemployment rate of 3.8%, one tenth more than the estimate three months ago. In 2023, unemployment will stand at 4.4%, five tenths more.
UNEMPLOYMENT AND INFLATION.
The US labor market created 315,000 non-farm jobs last August. On its side, unemployment rose two tenths, to 3.7%, thus maintaining the labor recovery in a sustained manner.
The country's economy experienced a contraction of 0.1% of its GDP in the second quarter, according to the second estimate of the data published by the Government Economic Analysis Office.
Likewise, the price index for personal consumption expenditure, the variable preferred by the Fed to monitor inflation, stood at 6.3% last July compared to the same month last year, five tenths less than the last month. The monthly rate registered a contraction of 0.1%, compared to the increase of 1% in the previous month.
The underlying variable, which excludes energy and food prices from its calculation due to their greater volatility, stood at 0.1%, five tenths less than in June, while the annual rate fell to 4.6 %, one tenth less.