July 5, 2022

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The central bank must intervene hard because inflation is so high in the United States

The central bank must intervene hard because inflation is so high in the United States

The central bank is likely to raise interest rates by three steps next year as inflation is so high in the United States. The US Federal Reserve announced this on Wednesday evening.



J Powell, chairman of the Central Bank


© D provided by the Telegraph
J Powell, chairman of the Central Bank

The central bank is gradually phasing out bond purchases, doubling its purchases by $ 30 billion every month.

This decision is not surprising, as economists previously expected the central bank to tighten even more quickly. But, it is happening much faster than previously expected. At the last meeting in November, central bank chairman Jay Powell and his colleagues had already cut monthly support purchases from $ 120 billion to $ 105 billion a month, doubling that amount.

The number of expected interest rate hikes is also staggering. In September, half of Fed executives thought they still did not need a tariff increase for the rest of 2022.

The central bank is now hitting a very hard brake as inflation rises in the United States. Inflation was 6.8% in November last week, the lowest level in nearly 40 years. This means that prices in the United States will rise even faster than in the Eurozone (4.9%), the Netherlands (5.2%) and Germany (6%).

Powell will comment on the results tonight.

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