Despite inflation, the US Fed announced that the interest rate would remain stable until 2023.

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source: ft.com

Meanwhile, the agency predicted that the price increase would reach 3.4% this year and that then it will gradually decrease.

ON WEDNESDAY, the US Federal Reserve (Fed) improved its economic growth forecasts for the country to 7% in 2021, compared to 6.5% calculated in March, and decided to leave interest rates unchanged, close to 0%, despite the rebound in inflation.

Following their two-day meeting, the Fed's Federal Open Market Committee (FOMC, in its acronym) explained in a statement that progress in the vaccination campaign in the United States, which has reduced the spread of COVID- 19, and the "strong political support" of the Government, the indicators of economic activity and employment "have strengthened."

That is why the US central bank raised its US growth projections for 2021 by five-tenths to 7% and left the unemployment rate forecast at 4.5%.

For next year, economic development expectations, according to the Fed, will be 3.3%.

Regarding interest rates, the Fed opted to keep them at the same level, in the range of between 0% and 0.25%, despite the rise in inflation, which shot up in May until registering a year-on-year rise of 5 %, the highest since 2008.

In this way, the reference rate remains at the same level it has been at since March 2020, when the US central bank implemented two rate cuts due to the effects of the COVID-19 pandemic on the economy of the USA.

In its analysis, the FOMC acknowledged that inflation "has increased" but attributed it "largely to transitory factors."

This reading coincides with that of the US Secretary of the Treasury, Janet Yellen, who precisely insisted on Wednesday that the rise in prices in the country is "temporary" and responds to "transitory" factors, especially associated with the reactivation of the economy after the hit by the coronavirus pandemic.

Fed President Jerome Powell has also repeatedly considered this price rebound to be transitory and responds to reopening economic activity as COVID-19 cases continue their sustained decline in the US.

The US job market created 559,000 non-farm jobs last May. On its side, unemployment fell to 5.8%, thus maintaining the job recovery that began a year ago, after the pandemic destroyed almost 21 million jobs.

The country's economy experienced a 0.4% contraction in the first quarter of 2021, according to the second estimate of the data published by the Government's Office of Economic Analysis.

For its part, the personal consumption expenditure price index, the variable preferred by the Fed to monitor inflation, stood last April at 3.6% compared to the same month last year. The monthly rate in the fourth month of the year was 0.6% which was the same as the previous month.

The underlying variable, which excludes energy and food prices from its calculation due to their higher volatility, also stood at 0.7 percent, three tenths less than in March, while the annual rate increased by 3, 1 percent, 1.3 points more than the previous month.