US Federal Reserve slows pace of rate hikes
The Fed has significantly reduced its growth forecast for 2023.
The second phase of the fight against inflation is launched in the United States, where the central bank, after having raised its rates sharply since the spring, is now slowing the pace and has drastically reduced its growth forecast for 2023.
The US central bank (Fed) on Wednesday raised its main interest rate by half a percentage point. This is now in a range of 4.25 to 4.50%, the Fed announced in a press release published after its meeting, specifying that the decision was taken unanimously. .
This is the highest level of its key rates since 2007. And the Fed has warned that it is not yet time to stop: further increases will be appropriate, says the institution.
Its officials even plan to increase them beyond 5%, whereas they anticipated 4.6% in the previous forecasts, published in September. And they should stay high for a while
Because the rise in prices has certainly shown a welcome slowdown, underlined the chairman of the Fed Jerome Powell, during a press conference at the end of this meeting.
But he believes that it will take much more evidence to be confident that inflation is of course a trend towards appeasement.
This turn, however, marks the beginning of a new phase in the fight against inflation, a priority for the Fed.
Faced with a rise in prices at most high for more than 40 years, the Fed had pulled out the heavy artillery, raising rates four times by three-quarters of a point, a level it hadn't hiked before since 1994.
But the effects of his decisions take months to be felt. And now recession threatens.
The New York Stock Exchange ended in the red on Wednesday, after the Fed's tougher than expected tone.
The Fed is also a little less optimistic than in September on the path of inflation, and now sees it slowing to just 3.1% in 2023, when it was counting on 2.8% previously, according to the PCE index it favors and wants to bring back around 2%.
For 2022, it expects 5.6%, compared to 5.4% three months ago.
The Federal Reserve has also significantly reduced its growth forecast for 2023 , now expecting 0.5% versus 1.2% previously. However, it raised it a little for this year, also to 0.5%, against 0.2% previously.
The institution does not evoke a recession for next year, despite the risks caused by its fight against inflation, which could slow down economic activity too much.
I don't think anyone knows whether or not there will be a recession in the United States, Jerome Powell pointed out.
The Fed's key rate was, until March, between 0 and 0.25%, a floor level intended to support the economy during the COVID-19 crisis by stimulating consumption.
It had also been driven by the particularly high level of savings among Americans, just as many goods were becoming more difficult to obtain due to global supply difficulties and labor shortages. #x27;work. Result: prices had soared.
And, if the decline has begun, it remains slow.
Inflation has thus slowed sharply in November, to 7.1% from 7.7% in October, according to the CPI index.
As for the unemployment rate, currently at 3.7%, she sees it rising to 4.6% in 2023 and 2024, a little higher than the 4.4% she previously forecast.
< p class="e-p">Employers are expected to struggle to hire again in the near future, as the country is facing a structural labor shortage, with 4 million people missing due to a he explained, early retirements, the million and a half deaths from COVID, and insufficient immigration.
It forces companies to raise wages to attract candidates and retain their staff.
I don't think we are in a price-wage spiral, however, Treasury Secretary Janet Yellen told reporters on Thursday.
The European Central Bank (ECB), which meets on Thursday, could also move into the second phase of the fight against inflation, and slow the pace, after a We have operated since July a monetary tightening unprecedented in its history.