The U.S. Federal Reserve said on Thursday the directors of the Federal Reserve banks of Dallas and Kansas City had both voted to raise the discount rate by a quarter percentage point to 3.75 percent

Tuesday, October 4, 2022

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All 12 regional Feds have now backed the discount rate move announced on Tuesday, alongside a matching rise in the Fed's more important funds' rate to 2.75 percent, following a meeting of the Federal Open Market Committee. In Tuesday's FOMC statement, only 10 of the 12 regional banks had voted on the discount rate. The voting is largely symbolic, but the ommission of Dallas and Kansas City may have signaled dissent, with their respective directors perhaps wanting a larger increase in U.S. borrowing costs, informs Reuters. On the face of it, the latest US inflation figures do not sound too shocking. Headline consumer prices increased in February by 0.4 per cent, against a consensus forecast of 0.3 per cent, and "core" prices (i.e. excluding food and energy) increased by 0.3 per cent, against a consensus of 0.2 per cent. But this was enough to push the annual rate of core inflation up to 2.4 per cent, which, as our chart shows, is the highest since August 2002. What's more, it seems set to pick up further, perhaps to about 2.5 per cent next year. The headline rate, which is currently running at 3 per cent, may fall sharply if, as I expect, oil prices fall back from their current elevated levels. Some commentators, however, worry that inflation could rise much further than this. What we are seeing, they allege, is the first stage of an upsurge in inflation caused by the weak dollar and strong commodity prices, but which will be pushed forward by generalised wage inflation, reports the Telegraph

Print The U.S. Federal Reserve said on Thursday the directors of the Federal Reserve banks of Dallas and Kansas City had both voted to raise the discount rate by a quarter percentage point to 3.75 percent

Bookmark The U.S. Federal Reserve said on Thursday the directors of the Federal Reserve banks of Dallas and Kansas City had both voted to raise the discount rate by a quarter percentage point to 3.75 percent