Inflation reached a new record in June, 9.1 % over a year, unheard of for over forty years. The objective of this decision is to make credit more expensive.
Le Monde with AFP
Faced with prices that keep climbing in the United States, the American central bank, the Fed, announced, Wednesday, July 27, a new increase in guiding rates of 0.75 point.
The Fed plans to continue to raise its guiding rates, she said. “The recent expenditure and production indicators have slowed down. However, job creations have remained robust in recent months, and the unemployment rate is still low,” said the Fed in a press release. Data-format = “inread_top” Aria-Hidden = “True”>
The meeting of the Fed Monetary Policy Committee, the FOMC, started on Tuesday. During its previous meeting, in mid-June, the FOMC had already carried the rates in a range of 1.50 to 1.75 %. It was then the highest increase since 1994. This time, the increase of 0.75 points carries the key rates between 2.25 and 2.50 %.
inflation at 9.1 % Over a year, in June 2>
The objective of this decision is to make credit more expensive to make consumption slow down and, ultimately, loosen the pressure on prices. Inflation has indeed still reached a new record in June, at 9.1 % over a year, unheard of for more than forty years in the first economy in the world. Consumption is the locomotive of the American economy, with almost three -quarters of GDP.
The comments that Jerome Powell can make on the pace of the increases that the institution envisages for the coming months will also be scrutinized and dissected by the observers. “Mr. Powell will repeat that the Fed considers inflation as a scourge, in particular for low -income households, and that political decision -makers are determined to lower it,” anticipates economist Ian Shepherdson, by Pantheon Macroeconomics.
The Fed said that it would take a drop in inflation so that it plans to stop raising its rates, or at least slowing down the pace of the increases. “We plan that this condition will be met at the time of the September meeting,” adds Ian Shepherdson. The long -awaited economic slowdown to lower prices could however prove to be too strong, and plunge the world’s first economy in the recession.
according to the IMF, “slim possibility” to escape the recession
The European Central Bank has also started to tighten its monetary policy, following a number of financial bodies. And the International Monetary Fund (IMF) said on Tuesday that it was essential that these institutions continue to fight inflation. This will not be done, certainly, not without difficulty and “a more strict monetary policy will inevitably have economic costs, but all delay will only exacerbate them”, according to the IMF. The Fed hopes to succeed in a “gentle landing”.
The good health of the American economy should allow him to escape a recession, according to the Minister of Economy and Finance of Joe Biden, Janet Yellen. The IMF is less optimistic. “The current environment suggests that the possibility that the United States escapes the recession is thin,” said its chief economist on Tuesday, Pierre-Olivier Gourchas.
The international institution no longer counts for this year only on 2.3 % growth in the United States, 1.4 points less than during its last forecasts, published in April. Grovely gross domestic product in the second quarter will be published Thursday. It should be very slightly positive, after a first negative trimester ( – 1.6 %), thus saving the American economy of the recession for this time.
In the event that it is again negative, the first economy in the world then entered technical recession. The very definition of the recession, however, is debated in the country approaching this publication: is it negative growth for two quarters, or a broader deterioration of economic indicators – which n ‘is not the case currently?