(Washington) At their last meeting, the officials of the American central bank (Fed) considered that it was preferable to show patience and to remain “very attentive to the risks of inflation”, even if the latter continues to slow in the United States.
They considered in particular that “in recent months, progress towards the 2% inflation target has been modest” and that, in a context of “low unemployment”, it was preferable to maintain the rates at their current level, according to the report. [minutes] from the meeting of the Federal Open Market Committee (FOMC) held on June 11 and 12.
After a continuous decline in 2023, US inflation experienced a slight rebound in early 2024 before slowing slightly, effectively pushing back a first downward movement in rates, which was initially expected by the markets during the second quarter of the year.
For now, the Fed continues to maintain its rates at their current level in a range between 5.25% and 5.50%, the highest since the beginning of the 21st century.e century.
As repeatedly stated by its chairman Jerome Powell, the Fed will continue to “take stock of the data and the evolution of the outlook, as well as the balance of risks,” according to the minutes.
The Fed has a dual mandate, aiming to promote full employment as much as possible while keeping inflation around its 2% target.
While neither mandate takes priority over the other, the situation in the labor market, with unemployment at its lowest point since the end of the COVID-19 pandemic at around 3.8%, allows the FOMC to focus on combating inflation that has so far been persistent.
However, the slowdown in the creation of new jobs and that of inflation, recorded at 2.6% over one year in May according to the PCE index, which is favored by the Fed, allow the institution to envisage a “rebalancing of macroeconomic risks” over the past year, according to the minutes.
Speaking at a central bank forum in Sintra, Portugal, on Tuesday, Powell referred to the Beveridge curve, an economic concept that represents the relationship between the unemployment rate and the number of vacant jobs, saying that the latter were falling rapidly, which should materialize in a slight rise in unemployment.
He also expressed satisfaction with the trajectory of inflation, but added that the Fed does not see it “returning to 2% as early as this year or even next year, maybe late next year, but rather the year after,” in 2026.
The Fed’s next meeting will take place on July 30-31, but markets are anticipating a first downward move on rates at the following one, scheduled for September 17-18.