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Fed sees rise in price 3 next year as it seeks to curb inflation | Business and Economic Affairs

The United States Federal Reserve has said it is accelerating the reduction of simple monetary policy and now sees interest rates up to three times by the end of 2022.

Easy money is falling into fashion.

The United States Federal Reserve concluded its final summit this year with the announcement that it would expedite the withdrawal of aid provided during the coronavirus crisis as its demands began to expand the labor market to prevent further collapse. rising inflation.

At the end of their two-day meeting Wednesday, the Fed said it was keeping its interest rate close to zero – as it has been since the opening days of the epidemic – but has accelerated the rise in bonds that have helped keep it afloat. long-term rental is cheaper.

As of January, the Fed has reduced bond purchases to $ 60bn a month – half of what it stood for in early November, and set up a major US bank to close them by the end of March.

The Fed also released new indicators of interest rates of up to 3 percent at the end of next year.

“We are leaving our own [bond] they are buying very fast because of the challenges of rising inflation and encouraging a more active market, the economy no longer needs a lot of supply support, “Fed Chairman Jerome Powell told reporters at a press conference after the meeting.

Although Wednesday’s staggering and sharp predictor of inflation was cited by Powell in his testimony before Congress earlier this month, it shows a dramatic change in the Fed’s priorities as the epidemic disrupts rising commodity and labor costs. .

Wholesale prices rise regular beat last month, when consumer prices rose ahead of them high-speed movements in about 40 years.

Meanwhile, the labor market is facing a shortage of workers as businesses struggle to fill it the frequency of job opportunities.

With more demanding jobs, companies are offering better pay and benefits to attract needy employees, driving an hourly wage of 4.8 percent in November compared to the same period last year.

The unemployment rate in the country also fell sharply in November to 4.2 percent as it approaches the 3.5 percent epidemic – a sector the Fed sees the economy set for next year.

Back in September, policymakers did not see the labor market peak until 2023.

“Compared to what happened in September, participants have also changed the number of unemployed people to fall this year and next year,” Powell said.

Although the US economy is booming, the risk of inflation is growing. And when consumer prices skyrocket – especially for essential purchases that do not stop – they criticize low-income families because they consume a large portion of their income.

“We understand that rising inflation poses serious problems, especially for those who cannot afford the high cost of basic necessities such as food, housing and transportation,” Powell said.

The Fed has a problem planning for the future. Rising inflation can be weak if its rise is too frightening. But if they are very angry, they may interfere with their recovery.

The Fed also adjusted its forecast for economic growth this year to 5.5 percent, compared with its September call for 5.9 percent growth. It also sees its favorite inflation gauge approaching 5.3 percent this year and 2.6 percent in 2022, compared to what was predicted in September that inflation will hit 4.2 percent this year and 2.2 percent next year.




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