The Federal Reserve of the United States (FED) increased its benchmark interest rate by 0.25% to neutralize the advance of inflation, without stifling the tenuous economic recovery and avoiding a recessionary scenario.
Wednesday's 0.25 percentage point increase, which was widely expected at the end of the Fed's two-day policy meeting, brings the federal funds rate to between 5.25 percent and 5.5 percent.
"Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring and inflation," according to a Fed statement. "The extent of these effects remains uncertain. The committee remains very attentive to inflation risks."
But the decision comes at a complicated time. Last month, officials left rates unchanged so they could understand what was happening in the economy, including the labor market, inflation and wages.
The Fed is essentially trying to tighten rates gently so they don't go too far and trigger a recession in the economy. But no one knows exactly what the right levels of rhythm and frequency are to avoid that.
Fed Chairman Jerome Powell and other officials who make up the Federal Open Market Committee (FOMC) began a two-day meeting in Washington on Tuesday to discuss the latest economic and labor market data in order to outline a monetary policy strategy that will ensure a "soft landing" of the economy, an elegant way to achieve the feat of curbing inflation. without causing a deep recession.
After the Fed began aggressively raising rates early last year, most economists predicted the economy would collapse, as consumers cut spending and businesses cut jobs and expansion plans.
However, that did not happen, although the Fed slowly adjusted the rate to ten increases and bring it to its highest point in 22 years.
Now, the market remains in a delicate balance in its positions for the action of the Fed.
But there is a unanimous opinion that the agency will maintain current rate levels until well into 2024.
News in development
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