2024-05-01 21:38:47
The US central bank (Fed) kept interest rates unchanged on Wednesday following its last meeting, reporting a “lack of progress” on the inflation front. It will deflate the volume of assets on the balance sheet less quickly from June.
The Fed is thus keeping its interest rates at the highest in more than twenty years, between 5.25 and 5.50%, a range within which they have moved since July, it announced in a press release published at the end of his meeting.
This has the effect of maintaining high interest rates on mortgages, but also on credit cards and even car loans. This monetary policy aims to try to prevent prices from continuing to rise.
2% target not reached
The Monetary Policy Committee (FOMC) specifies that “in recent months there has been a lack of further progress towards the target” of 2% inflation. According to this committee, inflation appeared to be on the right track, but it has started to rise once more since January.
In March, it was at 2.7% over a year, according to the PCE index preferred by the Fed.
Markets, which were full of hope that rates would start to fall in June, are now betting instead on September, or even November, according to an estimate from the CME Group.
Monetary policy “sufficiently restrictive”
Central bank president Jerome Powell warned at a press conference that it would probably take “more time than expected” before there was confidence in the fall in inflation. Prices will therefore remain high for longer, but he refrained from any prediction as to when they will start to fall.
However, he considered it “unlikely that the next interest rate move would be an increase”, as monetary policy is already “sufficiently restrictive” over time, according to the Fed.
At the time, this made Wall Street jump. The New York Stock Exchange ended in disarray, with most majors performing at uneven levels, according to quarterly results published in parallel.
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