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The central bank is planning a three-rate hike in 2022 as inflation eases the purchasing power of Americans

The central bank is planning a three-rate hike in 2022 as inflation eases the purchasing power of Americans

The central bank’s major change: The US Federal Reserve announced a three – day interest rate hike for 2022 at the end of two days of its Monetary Policy Committee meeting on Wednesday, December 15. The central bank’s key rates, which set the rent for the short term since the outbreak of the Govt-19 epidemic in March 2020, are between zero and 0.25, but the path to normalization is projected faster than expected: Central Bank members predict that key rates will average 0.9% by the end of 2022 in their September The forecast is above 0.4%. By the end of 2023, cash rents will rise to 1.6%, projected to increase twice a year, then to 2.1% in 2024 (both increases too) and 2.5% in the long run.

Read more The article is reserved for our subscribers In the United States, the Federal Reserve is beginning to reduce its support for the economy

This turn is explained by the rise in inflation, which is weakening the purchasing power of Americans and becoming a thorn in Joe Biden’s presidency. Described as temporary or unstable for a long time, it settles in the United States: inflation reached 6.8% in November, unheard of since 1982, and now affects all sectors of the economy. Initially, inflation was limited to obstacles to the resumption of the economy (cargo, semiconductors, raw materials), but this phenomenon created problems. “Larger and more durable than expected”, Central Bank Chairman Jerome Powell agreed at a news conference.

Read more The article is reserved for our subscribers United States: Inflation is highest since 1982
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Fears of an inflation-wage cycle have not been completely ruled out, as the unemployment rate fell faster than expected to 4.2% in November and labor shortages are felt. “Wages will change but, so far, wages are rising [qui a atteint 4,8 % sur un an en novembre] Does not make a significant contribution to inflation, Said Mr. Powell, The “Until now” Being one Warning Important. “We are concerned that higher wages than productivity will put pressure on inflation.” He continued.

Fears of an inflation-wage cycle have not been ruled out, as the unemployment rate fell sharply to 4.2% in November and labor shortages were felt.

Mr. Powell, who was re-appointed for a second four-year term by Joe Biden, has been in office since 1stThere is February has been the most alert to the economic upheavals associated with the epidemic. The good performance of employment, as measured by the unemployment rate, obscures the less satisfactory phenomenon, the decline in the participation rate of Americans at work: this is explained by the aging population and the reluctance of “some Americans to return to work”. , Govt-19 Fear and / or inability to spend due to accumulation of financial reserves during crisis and social and financial transactions. This deficit will lead to inflationary pressures.

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