Wednesday, February 8, 2023

The Fed sees with hope the moderation of prices in the US.

The Federal Reserve (Fed) indicated this Wednesday that the prospects for price moderation in the United States for the coming months are good, according to the agency’s contacts in its different districts published in its Beige Book.

“In general, the contacts in the different districts said that they expect the price increase to moderate more in the coming year,” he says in the publication.

The comment anticipates a moderation of the US central bank’s rate hikes as inflation in the country – at 6.5% in December – registers ever lower levels, after reaching 40-year highs last summer.

In December, the Fed raised its official interest rate by 0.5 percentage points to place it in a range between 4.25 and 4.5%. It was the seventh consecutive rate hike since March, although more attenuated than the last four, of 0.75 points.

Many analysts expect the central bank to announce a 0.25 point rise at its next meeting, as inflation, despite moderating, remains well above the agency’s 2% target.

The Beige Book, published eight times a year, is a Fed document that analyzes the economic situation in the 12 districts, or geographic areas, into which the agency divides the country.

This Wednesday, the Beige Book indicated that the labor situation continues to be robust, and that many employers were reluctant to lay off workers despite the drop in their sales due to the difficulty in finding workers.

The “misalignment” of the labor market – the difference between the supply and demand of workers – is one of the main reasons cited by the president of the Fed, Jerome Powell, to continue with the rate hikes and further constrain economic activity to deal with to curb inflation.

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