For 2023, the rates will continue to increase, up to 5.1 %, according to the estimates of the members of the Monetary Policy Committee of the American Central Bank. “We still have work to do,” said its president, Jerome Powell.
by Arnaud Leparmentier (New York, correspondent)
“We do not yet have a sufficiently restrictive monetary policy.” For those who doubted it, the American federal reserve (the Fed) still intends to increase its interest rates, as explained on Wednesday, December 14 Jerome Powell, even if she slowed down the pace. Thus, the institution has increased its guiding rates at the end of its two-day meeting by half a point. This pace is lower than the increases of 0.75 points made four times since June. In one year, the increase is spectacular: short -term rates, which still oscillated between zero and 0.25 % in March, are now between 4.25 % and 4.5 %, their highest level for fifteen years. This is the most brutal increase since 1980, when the illustrious predecessor of Mr. Powell, Paul Volcker, tried to defeat inflation at the cost of a terrible recession.
For 2023, rates will continue to increase, up to 5.1 %, according to estimates by members of the Fed Monetary Policy Committee. This figure is higher than the 4.6 % estimated in September, and it was not until 2024 that the central bank decided to reflux in the rent for money. Explanation, inflation is more durable than expected. The Fed now provides for 2023 an increase in prices excluding energy and diet of 3.5 % against 3.1 % in September.
The readjustment will be done next year at the cost of lower growth (0.5 %, or a quasi-recession against 1.2 %) and higher unemployment (4.6 %instead 4.4 %) that awaits. Mr. Powell has excluded to revise the increase in inflation by 2 % and set it at 3 % as some economists suggest. “We still have work to do,” he said, qualifying the stability of the “base” price of the economy. 2> some very encouraging signs
Nevertheless, some very encouraging signs intervened with the reflux of inflation stronger than designed in October and November. Since the annual peak of 9.1 % reached in June, the country fell back last month at 7.1 %. Excluding energy and food, this figure is 6 % against a higher 6.6 % in September. The pace in the month the month has slowed considerably (0.3 and 0.2 in October and November against 0.6 in previous months).
The question is to measure the impact of the Fed policy, which attempts to catch up in 2021, when it was still judging provisional inflation. This has a manifest role in deflation of the real estate bubble. Mortgage rates at thirty years are now 6.5 %. It is less than the 7.25 % of November but twice as much as a year. On the offer side, the bottlenecks are absorbed, with the fall in freight prices, the resumption of the production of microprocessors and the fall of oil (77 dollars for Texas oil, against 125 still in June) and the Fed N ‘is not there for much. On the request side, the fiscal policy played its role with the end of the exceptional support measures decided during the COVVI-19 pandemic: the American deficit went from 12.3 % to 5.5 % of the gross domestic product for closed years in September 2021 and 2022.
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