The fight against inflation does not let up. Despite the rapid slowdown in the US economy, the Federal Reserve of the USA has decided this Wednesday raise rates of interest for the third consecutive time in 0.75 percentage points, to a range of 3-3.25%, its highest level since 2008. It has not opted for the more aggressive one-point hike that some analysts had expected. But despite having made money three points more expensive so far this year, the central bank of the dollar has made it clear that it is far from having reached the ceiling of increases.

    Its president, Jerome Powell, already warned about it in his long-awaited speech at the meeting of central bankers in Jackson Hole (Wyoming) at the end of August. He then admitted that it would cause “some pain” to homes and businesses, a message he has repeated. “Higher interest rates, slower growth and a weakened labor market are painful for the public we serve, but they are not as painful as failing to restore price stability,” he has argued.

    The Federal Reserve, thus, has considerably lowered its GDP forecasts for the world’s leading economy to 0.2% this year, 1.2% next year and 1.7% in 2024 (compared to 1.7% , 1.7% and 1.9% that he forecast in June). The United States, in fact, has already accumulated two quarters of decline (0.4% quarter-on-quarter in the first and 0.2% in the second). “A soft landing is a big challenge. No one knows if there will be a recession or how deep it will be,” Powell admitted.


    Behind all this is a price level that does not give up. June was a fateful month, with the highest inflation in the country in the last 40 years: 9.1%. In July, it gave a negative surprise, moderating to 8.5%. But in August it disappointed again, falling to 8.3% and remaining two tenths above forecasts. And what is more serious, the core CPI -which measures prices without food and energy- stood at 6.3%, four tenths higher than in July, proof that inflationary pressures are spreading throughout the economy .

    The Federal Reserve has thus raised its inflation forecasts to 5.4% this year, 2.8% next and 2.3% in 2024. It will not be until 2025 that it returns to its 2% target. The underlying, in addition, will continue to be above that level at the end of its forecast horizon: at 2.1% in 2025, which puts pressure on the central bank to continue making money more expensive. Analysts, thus, estimate that rates will close the year at 4.4%, to rise to 4.6% the next, and drop to 3.9% in 2024 and 2.9% in 2025.

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    Powell has recalled that these forecasts provided by the FED do not imply that it is what is really going to happen. The Federal Reserve, he has assured, does not yet know how far it will raise rates because it will depend on the situation and “at some point” it will be “appropriate” to reduce the pace of increases. But the market and society must be prepared, he has warned, for a “tight” monetary policy for some time. “Historically softening too early has been a mistake,” she has argued.