Fed members expect more rate hikes in the coming months

Fed members expect more rate hikes in the coming months


“Respondents generally noted that upside risks to inflation expectations remained a major determinant of policy expectations,” and that Interest rates must rise and remain high “for inflation to be clearly on the 2% path”.

Only a “few” of participants spoke openly in favor of raising more than half a percentage point at the meeting, or said they “could have supported it.”

The minutes showed the Fed sailing towards it Increase a potential endpoint to its current rateboth of which slow the pace of approaching a potential halt more cautiously, but also leave open the question of how far rates will eventually rise if inflation does not slow.

The central bank raised the official interest rate in eight meetings, from a starting point close to zero last March to the current 4.50%-4.75%. During the year, the Fed’s inflation rate rose to its highest level in 40 years.

The monetary policy statement on February 1 stated that “Continued increases” will still be necessarybut shifted attention from the pace of upcoming interest rate hikes to the “reach”, a sign that they may be approaching. An appropriate rate to continue progress in reducing inflation.

Data is shown since the last meeting An economy that continues to grow creating jobs at an unexpectedly fast pace, and moving less steadily toward the Fed’s 2% inflation target.

The minutes showed that Fed officials are still aware of the risk of creating more measures so that inflation continues to fall.a hard-line bias that may be more apparent when they release new economic forecasts and projections at a meeting four weeks from now.

How does it affect Argentina

The Federal Reserve raising interest rates means that risk-free US Treasury bonds pay more. This reduces global liquidity, which is why emerging economies as a whole suffer at the level of financing and at the level of exchange.

in this context, Global investors are more eager to run from emerging countries to safe assets such as US Treasury bonds or the US dollar. This phenomenon is known as fly-to-quality. As a result, financing is more expensive around the world, which affects currencies and commodity prices.

With regard to domestic debt, Higher interest rates could mean that bonds continue to decline and make it more difficult for the country’s risk to fall.

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