The US central bank (Fed) plans to continue raising its reference rates to curb inflation, which remains very high in the United States, but judged, during its last meeting at the end of July, that it will be necessary, “in a moment” , to slow down. “It will certainly be necessary at some point to slow the pace of rate hikes,” when the effects of monetary tightening measures on economic activity and inflation are assessed, Fed officials said in the minutes of the July currency meeting. , published on Wednesday. .
They also spoke of the “risk that (the Fed) could tighten its policy more than necessary”, and stressed that curbing inflation “will surely take time”, according to these “minutes”.
In this meeting on July 26 and 27, the Fed’s monetary policy committee (FOMC) had raised its reference rates by three quarters of a percentage point, as in its previous meeting in mid-June. It was then the biggest increase in its rates since 1994. The Central Bank had already raised them during the two previous meetings, first in mid-March, by a quarter of a point – the usual increase -, before accelerating the movement in early May. , with an increase of half a point, then the largest increase since 2000. These rates are now between 2.25% and 2.50%.
Bring inflation to around 2%
Fed Chairman Jerome Powell had indicated in July that another “unusually high” rate hike might be needed in September. Afterwards, the inflation rate of July is now published, with a slowdown plus fort that tends to, at 8.5% over a year, and even a house des prix null over a month, according to the CPI index, which refers. But it is still very high, close to 9.1% in June, a record for more than 40 years.
The Fed wants inflation to return to around 2%, a level considered healthy for the economy. However, it favors another measure of inflation, the PCE index, whose data for July has not yet been published. The labor market remains very dynamic, and the unemployment rate fell in July to 3.5%, as in February 2020, when it was at its lowest level in 50 years. The total number of jobs in the country has also returned to its pre-pandemic level.
The minutes of the meeting specify that several of the Fed officials had noted “early signs that presaged a relaxation of the labor market.” They also expect “US GDP to grow in the second half of this year, but many believe growth will be below trend.” The next FOMC meeting is scheduled for September 20-21.
Source: BFM TV
