Jerome Powell, Chairman of the US Federal Reserve
These rate increases were intended to curb high inflation by raising the cost of credit. This tightening discourages consumption and investment, and eases the pressure on prices.
Inflation is thus gradually coming back into line .
The evolution of PCE prices, a measure favored by the Fed and which it wants to reduce to 2%, showed inflation underlying – excluding energy and food – at its lowest in almost three years, at 2.9% year-on-year.
Economic growth was much stronger than expected in 2023, even accelerating compared to 2022, to 2.5%.
As for the unemployment rate, it is still at its lowest levels in 50 years, at 3.7% in December, but is gradually rebalancing . January figures will be revealed on Friday.
The economy appears headed for a soft landing in the United States and around the world.
A quote from Nela Richardson, ADP Chief Economist
This amounts to reaching the desired level of inflation, without causing unemployment to soar or a recession.
We are fully focused on our desire to restore price stability, recalled San Francisco Fed President Mary Daly, new voting member of the FOMC, in an interview, but we still have work to do.
Moreover, nine months before the presidential election, and although the Fed is independent of political power, the subject is on everyone's minds. Democratic President Joe Biden and his main Republican competitor, Donald Trump, continue to tout their respective economic successes.
The rise in rates had increased the cost of loans, particularly real estate, while inflation has eroded the purchasing power of households, even if wages have generally increased.
Even consumers seem to be regaining their optimism: the Conference Board's confidence index reached its highest level since December 2021 on Tuesday.