The US Federal Reserve has increased the discount rate: what to expect

The US Federal Reserve System (FRS) increased the base rate on 0,25 to 1,5-1,75% per annum. This is stated in the message of the American financial regulator, according to RBC.

Фото: Depositphotos

The ministry explained that, according to the information received, the labor market continues to strengthen and economic activity is growing at a moderate rate. In recent months, good performance has been achieved, and the unemployment rate has remained low.

Recent evidence suggests that household spending and investment in fixed capital in business are moderated by their strong fourth quarter performance. In annual terms, both general inflation and inflation for goods other than food and energy continued to grow within 2%. Market measures to offset inflation have increased in recent months, but survey-based measures of long-term inflation expectations remain low.

In recent months, the economic outlook has increased, and the Fed expects that with further gradual changes in the position of monetary policy, economic activity in the medium term will grow at a moderate pace, and labor market conditions will remain strong.

Annual inflation is expected to grow in the coming months and stabilize around 2% in the medium term. Short-term risks for economic prospects look quite balanced.

The Fed expects economic conditions to develop in such a way as to ensure a further gradual increase in the federal funds rate; The federal funds rate is likely to remain for some time below levels that are expected to prevail in the long run.

However, the actual path of the federal funds rate will depend on the economic forecasts that will be reported by the incoming data.

The first reaction of American markets to the regulator's decision was positive: the S&P 500 index rose by almost 0,5%, and the Dow Jones index by almost 0,9%.

This is Powell’s first speech as head of the Fed following a rate decision. Powell took this position in early February, changing at this place is janet yellen.

Recall that in early February, analysts reported that in the face of growing federal budget deficits, the United States would be forced to borrow more than 1 trillion dollars this year, which could aggravate the hysteria that arose after a global sale in stock markets.

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