(Washington) The US central bank (Fed) began its meeting on Tuesday morning, during which it should resume rate hikes, by a quarter of a percentage point, after a pause in June, but also be cautious about further hikes.
The meeting of the monetary policy committee (FOMC) “started at 10 a.m. as planned,” a spokesman for the Fed told AFP. It will end Wednesday at midday.
The outcome seems to be in doubt, in the eyes of the majority of observers and market players: the officials of the institution will raise rates by a quarter of a point, resuming the cycle of increases started in March 2022, after a pause observed at the last meeting, in mid-June.
Rates are currently in the 5.00 to 5.25% range.
The decision will be announced Wednesday at 2 p.m. in a press release. The president of the institution Jerome Powell will then hold a press conference.
“There is a good chance that (Jerome) Powell will signal that further rate hikes are not ruled out, but the Fed will take a more cautious approach,” commented Ryan Sweet, chief economist for Oxford Economics, anticipating the possibility of another pause at the next meeting in late September.
Despite the slowdown in inflation, which fell in June to 3.00% year on year, its lowest level since March 2021, according to the CPI index, Fed officials should beware of any premature optimism.
“The Fed must strike a delicate balance between taking a meeting-by-meeting approach to monetary policy changes and ending the tightening cycle,” said Ryan Sweet.
Jerome “Powell pointed out that core inflation (excluding food and energy) had been stubbornly high and that was the main reason most FOMC participants were expecting (in June) at least two more rate hikes,” he added.
The Fed, which publishes its economic forecasts every other meeting, will not update them this time.
Across the Atlantic, the European Central Bank (ECB) will meet one day after the Fed, and should also raise its rates.