The American central bank announces yet another squeeze against expensive living and brings the cost of money to a fork of 3-3.25%, the highest level since the 2008 crisis. President Powell: “Our goal is inflation at 2 %, reaching it will not be painless “. Then the warning: “Ready for more increases in the future”. Wall Street goes negative
New Federal Reserve squeeze on the cost of money. After the afternoon meeting, the US central bank announced that it will raise interest rates by a further 0.75% to a range of 3.0-3.25%, the highest since 2008. This is the third consecutive increase. of this magnitude, a move designed to try to counter inflation which in the country had not been so high for 40 years. The reaction of the markets was immediate, with Wall Street turning red also in light of the cut in the economic growth estimates
The inflation specter
“The Fed is committed to bringing inflation back to 2% and has the tools and determination to do so.” These are the words with which the president of the central bank, Jerome Powell, announced the new squeeze. “Prices are the foundation of stable growth”, he added, specifying that he expects “further hikes” but that at some point it will become appropriate to “slow down the speed of increases”. Then he concluded: “I don’t know what the chances of a recession are but there is no painless way to leave inflation behind us.”
The reaction of the markets
On the markets, the Fed’s new move pushed the dollar further, although there was also an even more robust rise on the table, with the euro slipping to $ 0.9830. Wall Street, however, turned negative with the Dow Jones which fell by 0.1% to 0.2% two hours after closing.
The new economic forecasts published by the same central bank also pushed the Fed in the direction of greater tightening. The institute’s experts have in fact estimated a sharp slowdown in US GDP, which this year should grow by only 0.2% instead of the 1.7% forecast in June.