The President of the United States Federal Reserve (Fed), Jerome Powell, reported that the institution he leads decided to maintain interest rates in the current range of 5.25 % to 5.5 %, but that a new rise before the end of the year.

“Most members believe it is more likely that it will be appropriate to raise rates again at either of the two remaining meetings this year than not,” Powell said, however.

The president of the American issuing institute also maintained that “the full effect of the tightening has yet to manifest itself.” To this end, Powell recalled that at the beginning of the inflationary crisis it was “important” to act and raise rates quickly, but that, once one is “very close” to the terminal rate, it is necessary to act with caution and “common sense.” ” so as not to “fall short” or “exceed”, hence the agreed pause.

The American assured that future decisions will continue to be based on “the data received, the evolution of forecasts and the risks.”

In fact, Powell does not exclude the possibility that the neutral interest rate has increased with respect to the historical average, which would explain why the economy “has proven more resilient than expected” so far.

K. Tovar

Source: CNBC

(Referential image source: FED, dpa)

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The majority of the members of the Bank of Mexico decided to increase the reference interest rate by 50 basis points to reach 7%. Four of the five leaders of the financial entity voted for the eighth consecutive increase in the face of escalating pressures, global geopolitical tensions, supply chain limitations and rising inflation.

The governor of the Bank of Mexico, Victoria Rodríguez Ceja, the deputy governors Galia Borja Gómez, Gerardo Esquivel Hernández and Jonathan Heath, decided in favor of the increase of 50 basic points, while the deputy governor Irene Espinosa Cantellano voted in favor of increasing it by 75 points. base.

The interbank interest rate is a reference to carry out all financial transactions, ranging from mortgages, personal and legal loans, as well as the payment of credit cards.

The decision did not generate surprise due to the consent of the market that anticipated an increase on that scale given the conditions and factors of the global and national economy.

Inflation rising

In the statement published by the Bank, where it reports the decision, it explained that world inflation continues to increase as a result of critical knots, high food prices, the recovery of demand and extremely high energy and fuel prices.

According to official figures, annualized inflation in April reached 7.68 %, the highest rate in decades. “To the inflationary shocks derived from the health emergency are added the pressures from the geopolitical conflict and the strict confinement measures recently imposed in China,” the entity said in its statement.

Additionally, the Mexican bank explained that the rise in the “headline and core inflation forecasts until the second and third quarters of 2023, respectively, was revised, although it is still expected that the convergence to the 3 % target will be reached in the first quarter of 2024.

On the other hand, the country’s financial institution also updated its inflation forecast for the second quarter of the year, increasing it from 6.9% to 7.6 %, while for the third quarter it was adjusted from 6.1 % to 7 %. although it considers that by the end of this year it will begin its decline and “will converge to 3.1 at the beginning of 2024”.

M. Rodríguez

Source: elpais.com

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