Fnac Darty in loss in the first half but its sales resist

Fnac Darty in loss in the first half but its sales resist

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Faced with inflation that is not slowing down in the United States, the American Central Bank (Fed) hit hard on Wednesday. It announced a new sharp rise in its key rates to try to curb inflation, against a backdrop of the threat of recession.

The Fed’s Monetary Committee (FOMC) met on Tuesday and Wednesday, and raised its key rates by three-quarters of a percentage point. These are now between 2.25% and 2.50%.

This is the fourth consecutive hike: a quarter point in March, half a point in May, and three quarters of a point in June – its largest increase since 1994. And “the monetary committee anticipates that further rises in policy rates will be appropriate,” the Fed said in a statement.

The decision was made unanimously by the 12 voting members. The Monetary Committee was complete, with no vacant seats, for the first time since 2013.

The Fed, which usually operates in quarter-point hikes, proceeded with another sharp hike in an attempt to curb inflation which in June reached a new high for more than 40 years, at 9.1% on a year. The objective of these rate hikes is to make credit more expensive in order to slow down consumption and investment and, ultimately, to ease the pressure on prices.

The key rates had been lowered urgently between 0 and 0.25% in March 2020, to support the economy in the face of the Covid-19 crisis. They remained in this range until last March.

Employment still robust

“Recent spending and production indicators have slowed,” says the Fed, referring in particular to consumption, the locomotive of the American economy. “However, job creations have remained robust in recent months, and the unemployment rate is still low,” also comments the FOMC, which again ensures that it is “very attentive to the risks of inflation”.

Fed Chairman Jerome Powell will hold a press conference at 8:30 p.m. (Swiss time). The Fed hopes for a ‘soft landing’ but the long-awaited economic slowdown to drive down prices could prove too strong, which could weigh on the job market and even push the world’s largest economy into a recession. .

The good health of the American economy should however allow it to escape it, according to Joe Biden’s Minister of Economy and Finance, Janet Yellen.

The IMF, however, is less optimistic. “The current environment suggests that the possibility of the United States escaping recession is slim,” its chief economist, Pierre-Olivier Gourinchas, warned on Tuesday.

“Primordial”

The European Central Bank (ECB) has also started to tighten its monetary policy, following many financial authorities. The IMF said on Tuesday that it was essential that these institutions continue to fight against inflation.

This will, of course, not be without difficulty and “tighter monetary policy will inevitably have economic costs, but any delay will only exacerbate them”, according to the IMF.

The institution has sharply lowered its growth forecast for the United States in 2022 and now only expects 2.3%.

Second-quarter gross domestic product (GDP) growth will be released on Thursday. It should be very slightly positive, after a negative first quarter (-1.6%). But the risk of recession continues to weigh on the world’s largest economy.

The very definition of recession is debated in the country. Are these two consecutive quarters of contraction in Gross Domestic Product (GDP)? Or a broader deterioration in economic indicators? The controversy is likely to continue as the mid-term elections approach in November.

This article has been published automatically. Sources: ats / afp

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