Powell applies another turbo rate hike and announces it won’t stop

3 November 20222 years ago babelfish

Powell has decided not to give any respite to the US financial markets and the real economy in his war on inflation. The Federal Reserve raised the benchmark range for the federal funds rate by 75 percentage points to 3.75% -4% at its 2022 meeting. This is the sixth consecutive rate hike and the fourth three-quarter hike. quarter points, which pushes financing costs to a new high since 2008. The decision was in line with market forecasts. Policymakers have also stated that continued increases in the benchmark range will be appropriate and will take into account the cumulative tightening of monetary policy, the delays with which monetary policy affects economic activity and inflation, as well as economic developments. and financial, when deciding the extent of further increases.

The message seemed to point to a smaller rate hike in December, but President Powell also pointed out at the press conference that the final level of interest rates will be higher than previously expected all to fight inflation. The Fed aims to achieve a sufficiently restrictive monetary policy stance to bring inflation back to 2%, which remains high around the highs for 40 years now. Here is the rate chart:

We note that the interest level of 2018 has been largely exceeded and we are now at levels that have not really been seen for many years. Powell also feels strong on the basis of the latest employment data, which are positive: in fact, US private companies unexpectedly created 239,000 jobs in October 2022, the highest in three months now, compared to market forecasts. of 195,000 units. Hiring did not have a broad base, with the service sector creating 247,000 jobs, led by leisure / hospitality (210,000) and commerce / transportation / utilities (84,000). Here is the related graph

So Powell feels strong and is not afraid to scare the markets and the economy, even at the risk of causing a crash. In reality, various data, especially relating to the real estate market, are starting to be worrying, but we will talk about them, perhaps, tomorrow.

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The Powell article applies another turbo rate hike and announces it won't stop coming from Economic Scenarios .

This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/powell-applica-un-altro-turbo-aumento-dei-tassi-e-annuncia-che-non-si-fermera/ on Thu, 03 Nov 2022 07:00:00 +0000.