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In the United States, a new turn of the screw on rates

7/25/2023, 5:03:46 PM

Highlights: The Fed is likely to raise rates by a quarter point on Wednesday, despite falling inflation. Half of the decline in US inflation over the last twelve months would be credited to the Fed's action, according to a study by Allianz. The deceleration should continue to settle between 2.5% and 3% by the end of the year, and 2% - the objective for the Fed - by the year's end. The inflation figures, which these rate hikes are supposed to fight, are finally starting to show encouraging signs.


The Fed is likely to raise rates by a quarter point on Wednesday, despite falling inflation.

Here we go again for a turn of the screw. After a pause in June, which had given hope for the end of the hike cycle, the US Federal Reserve should, according to analysts' estimates, raise rates again on Wednesday. An additional notch, probably a quarter of a point, which would bring the Fed Funds in a range between 5.25% and 5.50%. This would be the eleventh rate hike since March 2022.

More than the others, this one is already debated, because the inflation figures, which these rate hikes are supposed to fight, are finally starting to show encouraging signs. In June, the increase in prices (CPI index) across the Atlantic reached 3%, compared to 9.1% in June 2022.

Read alsoAfter the Fed, the ECB should also raise its key rates

Half of the decline in US inflation over the last twelve months would be credited to the Fed's action, according to a study by Allianz. For the insurer's economists, the deceleration should continue to settle between 2.5% and 3% by the end of the year, and 2% - the objective...

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