PanamaTimes

Wednesday, Feb 21, 2024

US Federal Reserve Raises Interest Rate, Highest since 2007

US Federal Reserve Raises Interest Rate, Highest since 2007

The US Federal Reserve reinforced its inflation fight Wednesday by raising its key interest rate for the seventh time this year and signaling more hikes to come.
The central bank boosted its benchmark rate a half-point to a range of 4.25% to 4.5% and projected it would continue rising to above 5% in 2023, a level not seen since a steep economic downturn in 2007.

It released the new statement after a policy meeting at which officials scaled back from the three-quarters-of-a-percentage-point rate increases delivered at the last four gatherings.

The bank stated that inflation will slow to 3.1 percent, only in 2023, while it significantly reduced growth expectations for the year from 1.2 to 0.5 percent, avoiding economic contraction.

While the impact of monetary policy takes time to show on various sectors, positive signs appeared recently with the decline in the US consumer price index in November.

The Fed’s projections came according to the recent hike, with high unemployment and almost a halt in economic growth.

US central bankers see the policy rate, now in the 4.25%-4.5% range after Wednesday's 50-basis-point increase, rising to 5.1% by the end of next year, according to the median estimate in the Fed's quarterly summary of economic projections published at the end of its two-day meeting.

Only two of 19 Fed officials saw the benchmark overnight interest rate staying below 5 percent next year, a signal they still feel the need to lean into their battle against inflation that has been running at 40-year highs.

“The [Federal Open Market] Committee (FOMC) is highly attentive to inflation risks … Ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time,” the Fed said in a statement nearly identical to the one it issued at its November meeting.

The median projected unemployment rate is seen rising to 4.6 percent over the next year from the current 3.7 percent, an increase that exceeds the level historically associated with a recession.

Gross domestic product (GDP) is seen growing by just 0.5 percent next year, the same as estimated for 2022, before rising to 1.6 percent in 2024 and 1.8 percent in 2025, a level considered to be the economy’s long-run potential.

Fed Chair Jerome Powell said in his news conference following the FOMC meeting that the speed of coming rate rises is less critical now than earlier in the year when the central bank was “front-loading” rate hikes to catch up with accelerating prices.

“It's not as important how fast we go,” he said, noting the bigger question facing policymakers is finding an “appropriately restrictive” endpoint and determining how long to stay there.

“Our focus right now is really on moving our policy stance to one that is restrictive enough to ensure a return of inflation to our 2% goal over time, it's not on rate cuts,” Powell said.
Newsletter

Related Articles

PanamaTimes
Global Law Enforcement Dismantles Lockbit Ransomware Operation
Russian opposition leader Alexey Navalny has died at the Arctic prison colony
The President of Argentina Javier Mile does not fly private, he flies commercial, with the citizens he represents. And they LOVE him for it.
Bitcoin Reaches $50,000 for First Time in Over Two Years
Belo Horizonte: Brazil's Rising Carnival Hotspot for 2024
In El Salvador, the 'Trump of Latin America' stuns the world with a speech slamming woke policing after winning a landslide election
Tucker’s interview with Putin is over 50M views on X within the first 5 hours.
Finnish Airline, Finnair, is voluntarily weighing passengers to better estimate flight cargo weight
President Nayib Bukele has proudly announced El Salvador's remarkable achievement of becoming the safest nation in the Western Hemisphere.
Former Chilean President Sebastian Piñera Dies in Helicopter Crash
This farmer seems to understand science a bit more than the event organizer, Klaus Schwab.
Facebook turns 20: From Mark Zuckerberg's dormitory to a $1trn company
The Coolest Dictator in the World" on the Path to Victory in El Salvador
Macron, France and fake news
Indian-Origin Man 'King' Arrested For Smuggling $16 Million Drugs Into US
Can someone teach Americans that not every person with slanted eyes is Chinese?
Europe's Farmers Feeding the People, Protesting Against Politicians Who Do Nothing for Their Country and Serve Only Themselves at Taxpayers' Expense
Paris Restaurant That Inspired 'Ratatouille' Loses $1.6 Million Worth Of Wine
Brazilian Police Investigate Bolsonaro's Son for Alleged Illegal Spying
Police in Brazil Raid Residence of Bolsonaro Associate Over Allegations of Illegal Spying
Border Dispute Escalates as Texas Governor Vows Increased Razor Wire
OpenAI Enhances ChatGPT-4 Model, Potentially Addressing AI "Laziness" Issue
The NSA finally acknowledges spying on Americans by acquiring sensitive data
Report Reveals Toxic Telegram Group Generating X-Rated AI-Generated Fake Images of Taylor Swift
US Border Patrol States 'No Plans' to Remove Razor Wire Installed in Texas
Bitcoin Experiences Approximately 20% Decline in Value
Klaus Schwab recently appointed himself as the Earth's "trustee of the future."
DeSantis Drops Out, Endorses Trump.
Nikki Haley said former President Trump is "just not at the same level" of mental fitness as he was while president in 2016.
Residents of a southern Mexican town set the government palace on fire in response to the police killing of a young man
Samsung Launches AI-Driven Galaxy S24, Ushering in New Smartphone Era
Judge Questions SEC's Regulatory Overreach in Coinbase Lawsuit
The Ecuador prosecutor who was investigating the television studio attack, has been assassinated.
Is artificial intelligence the solution to cyber security threats?
Vivek Ramaswamy suspends his US election campaign and endorses Trump.
Viral Satire: A Staged Satirical Clip Mistaken as Real Footage from the 2024 World Economic Forum in Davos
The AI Revolution in the Workforce: CEOs at Davos Predict Major Job Cuts in 2024
Ecuador Reports 178 Hostages in Prison Gang Standoff
The Startling Cuban Espionage Case That Has Rattled the US Government
Two Armed Men in Ecuador, Dressed as Batman and The Joker Storm the Streets.
Armed Gang Raids Ecuadorian TV Station Following State of Emergency Declaration
Anti-Democratic Canada: Journalist Arrested for Questioning Canadian Finance Minister on Support of Terrorist Group
Ecuador's 'Most-Wanted' Criminal Vanishes from Prison
Mexican Cartel Supplied Wi-Fi to Locals Under Threat of Fatal Consequences for Non-Compliance
Border Surge Leads to Over 11,000 Migrants Waiting in Northern Mexico
Outsider Candidates Triumph in Latin American Elections
As Argentina Goes to the Polls, Will the Proposal to Replace the Peso with the Dollar Secure Votes?
Fatal Shark Attack Claims Life of Boston Woman Paddleboarding Near Bahamas Resort, According to Police
Former Bolivian President Evo Morales Denied Eligibility for 2025 Re-Election
Venezuela's Maduro Condemns 'Provocation' as UK Sends Warship to Guyana Venezuela's President Maduro has condemned the UK's deployment of the warship HMS Trent to Guyana as a hostile act amid ongoing border tensions
×