On Wednesday evening, the US Federal Reserve will issue the statement of the Open Market Committee meeting, followed by a press conference by its chairman, Jerome Powell, amid speculation of a seventh consecutive increase in interest rates this year.
Wall Street analysts estimate that today’s interest rate increase will be 50 basis points, which, if it actually happened, would be the first reduction in the increase after 4 consecutive increases of 75 basis points.
On Tuesday, the Fed received reassuring data from the US Bureau of Labor Statistics, as annual inflation rates in the country fell to 7.1 percent in November, down from 7.7 percent in October.
And as of last March, the Fed implemented the first increase in interest rates by 25 basis points, from 0.25 percent to 0.50 percent, with indications of accelerating inflation, due to the consequences of the Russian-Ukrainian war.
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Currently, interest rates in the United States are in the range of 3.75%-4%, before the increase is implemented today.
And last month, Powell acknowledged that the monetary tightening journey had come to an end, referring to the end of the “aggressive” interest rate increases of 75 basis points.
However, a report published Tuesday on the Wall Street Journal showed divisions among the Fed’s members, as some support continued monetary tightening, while others see the need to stop sharp increases in interest rates.
However, the most important question that the global markets are waiting for is when to stop interest rate increases and start a downward journey, to give the markets a period to regain momentum.
The strong increases in interest rates caused the stagnation of the housing market in the United States, damage to the currencies of emerging markets, and increases in interest rates for many countries around the world, which followed the example of the Federal Reserve in raising interest rates.