And after the US central bank raised interest rates ten times in a row, starting in March 2022, the Federal Reserve’s interest rate setting committee voted to maintain current interest rates. .
In a new economic outlook, the Fed indicated that the cost of borrowing will likely rise another half a percentage point by the end of this year, given the strength of the economy relative to expectations and the slowdown in inflation.
In an attempt to balance the risks facing the economy and the continued fight against inflation, the Federal Open Market Committee, which sets the interest rate, said in a closing statement to its meeting of the last two days: “Keeping the target The range (interest rates) unchanged at this meeting allows the committee to assess any additional information and its implications for monetary policy. The committee made its decision unanimously.
She added that further interest rate hikes “will take into account the cumulative tightening of monetary policy and the impact of monetary policy leading to lower economic activity and inflation, as well as developments economic and financial”.
The new projections, which harden today’s rate decision, show that policymakers on average expect to raise the benchmark overnight rate from the current range of 5-5.25% to the range of 5.50-5.75% by the end of the year.
Here are the most important provisions of the federal decision:
The Federal Reserve expects interest rates to reach 5.6% by the end of this year The Federal Reserve: Raises its growth forecast to 1% this year and cuts it slightly for the years 2024 and 2025 The Federal Reserve: Inflation rates are still high and we will continue to work to bring them back to their targets The unemployment rate is 4.1% in 2023, compared to 4.5% expected in March. Federal Reserve expects US economy to grow 1% in 2023, down from previous expectation of 0.4%
Inflation data in the United States showed a significant decline, as it slowed in May to 4.0% at an annual rate, from 7.9% the previous month, its lowest level since March 2021.
Inflation is twice as low as in June 2022, when it peaked at 9.1%, the highest level in almost 4 decades.
However, inflation remains well above the 2% target set by the Federal Reserve, which seeks to control soaring prices.
The Federal Reserve adopts another measure of inflation, which is the personal consumption expenditure index, whose figures for May were published at the end of June, and which rose again in April, reaching 4.4 % on an annual basis.
At the same time, the producer price index registered a 1.1% year-on-year decline last May, while Reuters expectations indicated a 1.5% rise, and had registered in April 2 .3%.
On a monthly basis, the producer price index fell 0.3% in May, while experts expected a fall of 0.1%, and it had registered a rise of 0.2% in April, according to data released today, June 14.
The US labor market continues to suffer from labor shortages, despite improving conditions.
Job creation in May was much stronger than expected, but the unemployment rate also rose more than expected, to 3.7%.
The volume of daily jobless claims in early June was the highest since October 2021.
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