Source [Atlantico] : By pursuing its strategy of fighting inflation, the Fed seems to care little about its partners and allies as well as emerging countries.
” No, of course ! “, will say the Fed, the American Central Bank.
But we can still ask the question as, following its mandate to fight against inflation, the Fed seems to care little about others, partners and allies, not to mention the emerging countries, all of which it weakens further. The Fed will reply that it is aware of this situation, like all the other countries, which know very well that it must react when “its” inflation goes above 2% for a long time. Nevertheless: all these countries are worried, complain and seek to curb it. The IMF itself is sending worrying messages about the mounting risks to global financial stability. The Fed then had one of its leaders say that it did not really believe in it: the banking and financial markets were solid, according to it… at home. So the Fed rate hikes will continue and push the ECB, European Central Bank, to do the same, bringing the Eurozone to the brink of recession. Or worse ?
Two increases to come on the American side
So everyone is thinking of November 2, when the Fed should raise its rates by 0.75%, to reach 4%… to counter inflation at 8.3%? She has therefore not finished, to reach her goal of 2%! Especially since US employment is resisting these increases. In September, in fact, 263,000 jobs were created, more than the 250,000 forecast, and above all with an unemployment rate which fell to 3.5% against 3.7% the month before, i.e. its highest point low for 29 months. The labor market therefore remains too tight for the Fed. Admittedly, a few signs of weakness are appearing: the hourly wage seems to have decelerated since July, job vacancies are falling and the youth unemployment rate is rising a little. All of this is going in “the right direction” for the Fed: that of a rise in unemployment which will calm wages and then inflation, but is not enough to make it lower its guard. It therefore concocts an increase in short rates for November 2, then one for December 14, in order to end the year with American short rates at 4.75%, barring a crisis of course. Then she will see.
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