The Fed’s latest meeting minutes indicated that the US central bank raised interest rates by 25 basis points at its last meeting to 5.50%, with the aim of reducing inflation, which is still far from its target. Fed Chairman, Jerome Powell stressed that the US Central Bank will continue to evaluate economic data and its impact on economic expectations. The Fed will also be ready to adjust monetary policy if risks arise that may impede inflation returning to 2%.
Therefore, the economic data that will be issued during the coming period will give the Federal Reserve a clearer picture of the economic conditions and the course of monetary policy during the coming period, especially since many members indicated that the state of uncertainty still dominates the economy, so reliance will be on economic data.
The minutes also referred to the strength of the US economy and the strength of the labor market. Unemployment rates continued to decline while average wages rose slightly. Although US jobs data fell by more than expected, this decline is considered slight, and the data is still positive. This was also reflected in the growth of GDP, which rose more than expected and reached 2.4%, resulting from strong consumer demand and strong performance of US companies, especially in the tech sector.
The Fed has not yet determined whether there will be an additional interest rate hike during the September meeting, or if they will be fixed at current levels. However, analysts and economists expect that there may be an additional rise in interest rates before the end of this year, and interest rates may remain high during the first half of next year before being reduced. This is something that could negatively affect the US economy over the course of next year, running the risk of recession, according to some analysts. However, most economists considered this event unlikely.
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