(Washington) The economists of the American central bank (Fed) estimated, in the minutes of the last meeting of the institution published on Wednesday, that the American economy was still heading towards a “mild recession” at the end of the year and early 2024.
Participants at the meeting had already anticipated a mild recession “in the course of the year” on the previous one, on March 22, this time seeming to envisage it occurring a little later in the year.
On May 3, despite this advice from its economist teams and in a context of persistent tensions in the banking sector, the Fed’s Monetary Committee (FOMC) raised interest rates for the tenth time in a row, by a quarter of a percentage point.
The participants had justified this decision by the persistence of “inflation still much higher than the long-term objective of 2% and underlying inflation (which excludes food and energy prices, editor’s note) which shows only a few signs of moderation”.
The FOMC estimated that inflation remained “at an unacceptable level” and that the decline observed in March was “lower than expected”.
Inflation for the month of April, according to the PCE index which is the one taken into account by the Fed, should be published on Friday.
During a speech on Wednesday, one of the participants in the FOMC, Christopher Waller, considered that “the data since the last meeting has not so far given a sufficiently precise idea” on the advisability of a new rate hike.
The FOMC did not have a fixed position at the beginning of May concerning a potential new hike, with some participants pronouncing themselves in favor while others felt, on the contrary, that it would be more appropriate to wait to see the effects of the hikes already carried out.
“We have not made any decision as to the extent to which additional policy strengthening would be appropriate,” FED Chairman Jerome Powell recalled on Friday.
The next FOMC meeting is scheduled for June 13-14.
According to the CPI index, inflation slowed slightly again in April, to 4.9% over one year against 5% in March, but had rebounded over one month.
Just over a quarter of market participants expect the Fed to raise rates in June, according to CME Group’s assessment.