Investors, workers and employers are already counting down the meeting of the Federal Reserve Bank, FED, for next March with the hope of a pause in the increase in interest rates that makes housing loans and debts more expensive. credit card.
All because at this week’s meeting, Jerome Powell, chairman of the Fed, confirmed that he continues his aggressive fight against inflation and raised interest rates by 25 basis points.
And while he said he can talk about “disinflation” for the first time, he was also wary of declaring victory against the cost of living.
The interbank rate was in a range of 4.50% to 4.75%, but the goal is 4.25% to 4.50% and Powell wants to return to his comfortable 2% inflation because in recent months we have paid the most expensive food and services in the last 40 years.
But looking at the glass half full, the measure was less drastic than the decision of December 2022 when the FED raised the interest rate by 0.50% seeking to curb household debts and prevent consumers from getting into trouble, generating greater risks to the economy. And to achieve this, his hand did not tremble by raising rates by 75 basis points in four consecutive sessions.
Although analysts raised their voices for fear of increasing unemployment, the challenge is to prevent the economy from overheating, despite the fact that employment falls victim to this battlefield.
That is why there are already bets on what would be the movement of the Markets Committee of the Federal Reserve Bank on March 21, because until now the only thing that seems certain is that there will not be cheap money for a long time. Powell himself affirms that he does not expect an interest reduction to be adopted soon, or not at least in 2023.
What Powell does seem to be sure of is that the market and consumers are betting on a return of 2% inflation, however, the question is how to achieve it, when oil prices continue to be around $80 per barrel and with the reactivation of the economy in China, after the pandemic, increases demand, while raising gasoline prices, generating a domino effect by increasing the value of food.
Powell is confident that costs will start to drop, but it will be a slow process and that leaves us waiting for what is defined next March.
As the author, Sofía Villa writes this column in her personal capacity and her opinions do not represent Televisa-Univision Inc. where she works as Writer/Producer.