The Federal Reserve met earlier today to decide whether to raise interest rates for the 11th time since March 2022 to its highest point in 22 years; it decided in the affirmative.
The Fed raised rates by a quarter of a point, as it’s trying to achieve a soft landing for the economy after inflation and low unemployment have heated it up more than the Fed would like.
Yet according to the Associated Press, economists and financial traders have grown more optimistic that a steady easing of inflation without an economic downturn can be achieved.
Economists at Goldman Sachs announced they thought the likelihood the U.S. would avoid a recession to be 80%. Matthew Luzzetti, Deutsche Bank’s chief U.S. economist, said “We have greater resiliency within the economy than I would have anticipated at this point in time, given the extent of rate increases we’ve gotten.” Luzzetti pointed out that many Americans still have savings from pandemicchecks distributed by the federal government, which helped the United States recover from last year’s worldwide spike in inflation faster than most other economies.
Unemployment remains at near the lowest rate in a half-century and at the same time, inflation has steadily declined. In June, prices rose just 3% from a year earlier, down from a peak of 9.1% in June 2022 though still above the Fed’s 2% target. Core prices, which exclude volatile food and energy costs, rose just 0.2% from May to June. It was the slowest monthly rise in nearly two years.
