OUR US Federal Reserve Bank continues transition to restrictive monetary policy but slows growth borrowing costs after the recent de-escalation inflation to a superpower. Yesterday Federal Reserve moved to the eighth increase in interest rate, as he continues to fight inflation, which remains high in the US. However, he was satisfied with an increase in interest rates of only 25 basis points, with the result that dollar rates are now in the range of 4.5% to 4.75%. This is a particularly high level, given that a year ago they were almost at zero levels.

The Fed said in a statement that further interest rate hikes are expected going forward to ensure the economy tightens as much as it needs to control inflation. He also stresses that inflation has indeed “decreased somewhat” but adds that it remains “at a high level.” Explaining her reasoning, she adds that with a softer hike, her executives would have time to assess the impact that the increase in borrowing costs had on the US economy, a total of 4.25 percentage points. She also notes that the softer increase gives her more flexibility to adjust her posture if needed.

A modest 25 basis point hike appears to have put an end, at least for now, to the Fed’s unusually aggressive turn towards restrictive monetary policy, economic analysts said. The Fed has identified seven rate hikes since the middle of last year, some by 50 basis points. and others at 75 m. Thus, in total over the past year, the Fed has increased borrowing costs by 3.5 percentage points in an attempt to stem the breakneck inflation that the superpower has faced for 40 years.

Dollar rates are currently in the range of 4.5% to 4.75%.

After all, the Fed was the first of the major central banks to combine these aggressive rate hikes with a policy of “quantitative tightening,” that is, shrinking its portfolio by selling bonds accumulated over recent years. In short, yesterday’s move by the Fed signals a shift to a more normal rate of growth in borrowing costs, to a more conventional fight against inflation. Despite the reservations expressed by market participants and economists about how much more the economy can rise, the fight against inflation will continue. And that’s because everything points to inflation being fueled by higher wages and more job openings reported by American businesses. Another 572,000 jobs were added in the US manufacturing industry in December, adding to the pressure for higher wages.

Total job openings in the US economy reaches 11 million, according to the Department of Labor. They are rising steadily, from 10.46 million as late as November, beating economists’ forecasts of a decline to 10.25 million. These job vacancies are extremely high, but remain well below the record levels recorded in March last year.

Inflation does not help the ECB

While economists and analysts agree that the ECB raised interest rates by 50 basis points today, developments on the inflation front are somewhat reassuring, as numbers fell for the third month in a row in January. Headline inflation in the Eurozone eased to 8.5% from 9.2% in December, according to Eurostat, with forecasts for a de-escalation to 9%. However, this development does not give the ECB much room to maneuver and is not expected to have a significant impact on its decisions for two reasons: primarily because structural inflation, which rules out energy and food price volatility, has accelerated to 7%. from 6.9%. At the same time, however, the figures are not considered entirely reliable because, in the absence of an official German inflation report for the eurozone’s largest economy, Eurostat filled in the gap with an estimate derived from a theoretical model.