In its statement, the Fed’s Federal Open Market Committee also anticipated that new rate hikes “will be appropriate” in the future to continue helping contain prices and return the inflation rate to its 2% target.
The Federal Reserve (Fed) of the United States agreed on Wednesday a half-point rise in interest rates, which will now be in a range between 4.25% and 4.5%, in a new attempt to contain the inflation.
This is the seventh consecutive rate hike since March, although it is more attenuated than the last four, which were 0.75 points.
To decide the pace that these future increases will have, the committee will take into account the effects that this restrictive policy is having on economic activity and inflation.
In any case, in his statement he already stressed that job creation remains robust and the unemployment rate remains low, and he sees modest growth in both spending and activity.
Inflation
It also considers that inflation remains high as a reflection of the imbalances still related to the pandemic and the supply chain, as well as the rises in food and energy prices due to “pressures” from outside the country.
“The committee will be prepared to adjust its monetary policy so that it is consistent with the risks that may arise and that may impede the objectives” of this body, the note continues.
The interannual rate of inflation in the United States has continued to decline and in November it stood at 7.1%, 6 tenths below that of October, according to data published Tuesday by the Bureau of Labor Statistics (BLS).
The Fed and interest rates
When the Fed announced its fourth consecutive 0.75 point hike last November, Powell felt there was still room to bring inflation back to its 2% target without triggering a recession.
In view of the latest unemployment data, the Fed’s restrictive monetary policy is not yet having a strong impact on the labor market.
And it is that unemployment in the United States did not register changes in November and the rate remained at 3.7%, that is, regarding 6 million people.
In that month, 263,000 new jobs were created, 2,000 more than during October.
