(Washington) The American central bank (Fed) plans to continue raising its key rates in order to curb the still very high inflation in the United States, but judged, during its last meeting at the end of July, that it will be necessary, “at a time”, to slow down the pace.
Posted at 2:11 p.m.
Updated at 2:29 p.m.
“It will certainly become necessary at some point to slow the pace of rate hikes,” when the effects of monetary tightening measures on economic activity and inflation will be assessed, Fed officials said in the minutes. of the July monetary meeting, published on Wednesday.
They also mentioned the “risk that [la Fed] can tighten its policy more than necessary”, and underlined that slowing down inflation “certainly will take time”, according to these “minutes”.
At this meeting of July 26 and 27, the Fed’s monetary policy committee (FOMC) had raised its key rates by three-quarters of a percentage point, as at its previous meeting in mid-June. It was the biggest rate hike 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. point – then the biggest increase since 2000.
These rates are now between 2.25% and 2.50%.
Fed Chairman Jerome Powell had indicated in July that another “unusually high” rate hike might be needed in September.
Since then, inflation figures for July have been released, showing a stronger than expected slowdown, to 8.5% over one year, and even zero price increase over one month, according to the CPI index, which refers to. But it remains very high, close to 9.1% in June, a record for more than 40 years.
The Fed wants to bring inflation back to around 2%, a level considered healthy for the economy. However, it favors another measure of inflation, the PCE index, whose July figure 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 in 50 years. The total number of jobs in the country has also returned to its pre-pandemic level.
The report of the meeting thus specifies that several of the Fed officials had noted “the first signs heralding a loosening of the job 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.