Thursday, December 01, 2022

US Federal Reserve declares war on inflation

US Federal Reserve declares war on inflation

Carlos Aruzu

federal Reserve The United States has declared war on inflation and appears reckless about using the most powerful tool to win this battle: raising interest rates.

Beyond the aggressive 0.75% increase in the interbank reference rate, most worryingly, a recent message taken from a few words shared by Jay Powell, the chairman of the said central bank, indicates that in November we will have a And the increase will be according to the same period.

In Panama we have felt inflation several times in recent memory.

So the last 12 months have confirmed the world trend of an uncontrolled spiraling increase in prices. The equipment in our country is very limited to face this harsh situation.

In March of this year we estimated that by October we the people of Panama might be receiving communications from our banks about an increase in mortgage and car loan payments.

Fears are now beyond inflation, a recession appears imminent. No central bank wants to cause this pain but there is no easy way to do it. It is very likely that the global recession will go hand in hand with layoffs and that unemployment, which is less than 10% in Panama today, will skyrocket again. In the United States, the unemployment level is projected to increase from 4.4% to 3.7% by 2023, where it is today.

Global distrust is felt in the fall in the value of the company’s shares and increased returns on US Treasury notes. This combination generally marks a trend in bearish fears, not to mention what we are seeing in the North American residential market where adjustments in down prices and upward rates may mark the end of an expansionary cycle. Only ever seen.

As this world situation descends on our beloved Panama, it is time to exercise caution in spending, both public and private. These last months of the year, which are usually one of ruin and lack of control, must be something different given the unusual inflationary situation we are experiencing. The world’s central banks would win the war against inflation, but the cost of the fallen would be enormous.

Financial relations September 29. jpg

To Economist Carlos Araz, The United States Federal Reserve Has Declared War On Inflation And Appears Reckless About Using The Most Powerful Tool To Win This Battle: Raising Interest Rates.

To economist Carlos Araz, the United States Federal Reserve has declared war on inflation and appears reckless about using the most powerful tool to win this battle: raising interest rates.

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