The central bank has published its latest economic report.
(Photo: Reuters)
Washington According to the Federal Reserve (Fed), the US economy has recently grown moderately. Economic activity improved slightly overall at the beginning of 2023 despite different developments in the twelve districts, the US central bank announced in its “Beige Book” economic report published on Wednesday. The survey ran until February 27 and was based on business contacts from the regions.
The inflationary pressure has mostly persisted, but the price acceleration has calmed down in many districts. In view of the great uncertainty, the companies surveyed did not assume that the economic conditions would improve significantly in the coming months. However, the upward pressure on prices is likely to weaken over the course of the year.
Despite high inflation and rising interest rates, the economy remained on course for growth before the turn of the year. Gross domestic product (GDP) increased by 2.7 percent on an annualized basis from October to December.
According to central bank chief Jerome Powell, consumer spending should increase at a solid pace in the current first quarter of 2023. At the same time, however, the latest economic indicators signaled subdued production growth. The real estate sector is also suffering from higher mortgage interest rates.
At the same time, given persistently high inflation, Powell signaled a higher interest rate peak to the financial markets. The Fed recently raised the key interest rate by only a quarter of a percentage point: to a range of 4.50 to 4.75 percent.
>> Read here: Fed Chair Powell – No decision yet on the size of the March rate hike
Now, a bigger move of half a percentage point could follow at the March 22 meeting. In its outlook – known in technical jargon as the “dot plot” – before the turn of the year, the Fed management had estimated an average key interest rate of 5.1 percent for the end of 2023. According to experts, it can be assumed that the next “dot plot” will show a higher interest rate peak.
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