The US central bank seeks to curb inflation, while limiting the impact of its decisions on economic growth, based on the strength of the labor market, which is indicated by unemployment and unemployment claims data, and taking into account retail sales data.
Previously, the US Central Bank raised interest rates last March by 25 basis points, then 50 basis points in May, then 75 basis points in June, and 75 basis points in July, bringing interest rates to between 2.5% and 2.75%, compared to 0.25% at the end of last year.
US consumer prices rose 8.3% in the 12 months to August, as inflation growth slowed for the second month in a row, but rates were still higher than expectations at 8% year-on-year, after rising 8.5% in July. .
The Federal Reserve will continue its fight against record inflation "at any cost" to bring down prices and ease the burden on American consumers, according to Fed Vice President Lyle Brainard.
It is noteworthy that the goal of the Federal Reserve is to reduce inflation to only 2%.
The US economy contracted during the second quarter by 0.6%, after it contracted 1.6% in the first quarter, which is evidence of entering into a technical recession.
In August, the White House lowered its forecast for US real GDP growth for 2022 to 1.4%, from 3.8% its previous estimate in March, citing the re-emergence of the Omicron mutated, the war in Ukraine, persistently high inflation and interest rates as reasons. to slow down.
He expected inflation to record 6.6% this year, from 2.9% estimated in March, and the average unemployment rate for 2022 was revised slightly down to 3.7%, from 3.9% estimated in March.
For its part, Goldman Sachs lowered its forecast for the growth of the US economy for the year 2023, while keeping it at zero percent during the current year, while anticipating the Federal Reserve's decision to raise interest rates.
The bank forecast that the US gross domestic product will grow by 1.1% in 2023, compared to a previous forecast of 1.5%.
The head of the International Monetary Fund, Kristalina Georgieva, called on central bankers to be persistent in the fight against inflation, acknowledging that many economists were wrong in their prediction of a decline in inflation.
Georgieva saw inflation as broader than the Fund thought, and therefore, the resilience of central bankers was needed in combating it.
She noted that the coming year may be less painful, but if fiscal policy is not sufficiently controlled, it may act against monetary policy, which would raise inflation.