The US Federal Reserve (Fed) announced on Wednesday that it would keep its key rates between 0 and 0.25%, but signaled that it planned to raise them in mid-March amid high inflation and a weak market. work considered solid.
The Fed is ready to raise its key rates at its next meeting, scheduled for mid-March, its chairman Jerome Powell said on Wednesday.
“I would say the committee is of the view that the federal funds rate should be increased at the March meeting, assuming the conditions are appropriate to do so,” he said in an unusually specific comment. In its statement following its meeting, the Fed had earlier indicated that it would raise rates “soon”.
“With inflation well above 2% and a strong labor market, the (Monetary Policy) Committee expects it will soon be appropriate to raise the target range for the rate,” the institution said in a statement. a statement issued earlier in the day following its regular monetary policy meeting.
Bank officials said it would end its asset purchases “in early March”, a sine qua non for raising rates possibly in the wake of its meeting scheduled for mid-March.
Key rates had been lowered within a range of 0 to 0.25% in March 2020, in the face of the COVID-19 pandemic, to support the economy through consumption.
The objective is to slow inflation by weighing on demand, by pushing up interest rates on loans granted by commercial banks to individuals and businesses.
The Fed also signaled a reduction in supply constraints, which should help to slow inflation.
The publication of the Fed’s press release initially caused the Nasdaq to jump by more than 3% before tempering its reaction.
The Fed had groomed the ground at its previous meeting in mid-December, announcing that it would end its asset purchases earlier than expected, starting in March instead of June.
It had also, for the first time, ceased to qualify as “temporary” this inflation which has been, for months, well above its long-term objective of 2%.
Prices have climbed 7% in 2021, their fastest pace since 1982, according to the CPI index. The Fed favors another indicator of inflation, the PCE index, whose data for 2021 will be published on Friday.