The Federal Reserve (Fed) chose theUnited States Personal Consumption Expenditure Price Index to monitor inflation. This gauge indicates that prices grew by 5.0% in year-on-year terms during the month of December, showing a half point moderation compared to the month of November, as reported by the Government Economic Analysis Office.
The underlying index, which excludes food and energy prices from its calculation due to their greater volatility, closed the last month of 2022 with an increase of 4.4%, three tenths less than the previous month. In monthly rates, the general variable of the index experienced an increase of 0.1%, the same as in November, while the underlying variable rose one tenth to 0.3%.
The high levels of inflation due to the ‘post-covid’ macroeconomic conditions and the war in Ukraine have negatively affected GDP growth. To cope with rising prices, The Federal Reserve raised interest rates by half a point. up to a range between 4.25% and 4.5% last December. The next revision of this figure will be announced on February 1, the day the Fed officials will meet again. In addition, this Thursday it was learned that the first economy in the world grew by 0.7% in the fourth quarter of 2022, one tenth less than in the previous quarter. In the year as a whole it increased by 2.1%.
Likewise, the Fed has advanced that during the next few weeks it will have to make a decision of great importance since the central bank could increase its rates by 25 basis points, facts that would slow down its growth in order to actively face inflation.
These falls suggest that the economy will suffer a lot in the future, so that the recession is an increasingly justified fear. Likewise, the Fed’s total assets are down 5.3% from the highs recorded last year, although the balance is still above the records of 2020 before the pandemic broke out.
