(Washington) The monetary committee of the American central bank (Fed) began its meeting on Tuesday morning, and is expected to proceed with a fourth straight increase in its key rates, in the face of unabated inflation, and while the recession threatens.
Posted at 10:44 a.m.
Updated at 11:01 a.m.
“The meeting of the monetary policy committee (FOMC) began at 10:30 a.m. as planned,” a spokesman for the Federal Reserve told AFP.
The discussions will end Wednesday at midday, and will be followed by the publication of a press release at 2 p.m. and then a press conference by the president of the institution, Jerome Powell, at 2:30 p.m.
Rates, which are in a range of 1.50 to 1.75%, should be raised, for the fourth time since March, in order to slow inflation. This reached 9.1% last month, its highest level for more than 40 years.
And the rise should be strong, to hit a big blow.
Most market players are expecting a rise of three-quarters of a percentage point, as at the last meeting in mid-June, according to CME Group’s futures product valuation. It was the biggest increase since 1994.
And a quarter of investors even believe that the Fed will accelerate, raising its rates by one percentage point directly, something not seen since the 1980s.
Indeed, the Fed usually proceeds by quarter-point hikes, as was the case in March, when it had raised its rates which had been between 0 and 0.25% since March 2020. It then accelerated the pace, with a rise of half a point in early May, then three-quarters of a point in mid-June.
Raising the key rates has the effect of making credit more expensive for households and companies, which should slow down consumption, and therefore ease the pressure on prices.
Jerome Powell should, during his press conference, give indications on the rhythm of the increases that the monetary committee envisages for the following meetings.
But this deliberate slowdown in the economy may weigh on employment, especially as the risks of recession increase.
US gross domestic product (GDP) growth for the second quarter will be released on Thursday. It had been negative from January to March, and if it is negative again between April and June, it would mean that the country is technically in recession.