2023-08-16 19:00:23
(Washington) The increase in interest rates decided at the last meeting of the US Federal Reserve Monetary Policy Committee (FOMC), on July 25 and 26, was not unanimous among the participants, according to the report released Wednesday.
After the meeting, “a few members indicated that they favored holding rates or might support such a proposal,” according to the Fed’s minutes.
At the end of this meeting, the FOMC had finally decided to increase its rates once more by 25 basis points, bringing them to a range between 5.25% and 5.50%, estimating that inflation in the United States was still above its target of 2% per year.
Published a few days following the meeting, the PCE index, which is the one favored by the Fed for its monetary policy, stood at 3% over one year in June, its lowest level since the beginning of the year. 2021.
Nevertheless, core inflation, which does not take into account volatile energy and food prices, remained at 4.1% over one year, although declining, in particular due to a ever less marked decrease in services, especially housing.
While diverging opinions were expressed regarding the rate hike, all of the participants felt that “maintaining the current level of restriction [de la politique monétaire] should make it possible to approach the objective” of 2% inflation at an annual rate, “while giving the committee time to assess this progress”.
Moreover, “most participants recognized that there were still risks” of persistent inflation which might “require further tightening of monetary policy”.
On Tuesday, Minneapolis Fed Chairman and FOMC member Neel Kashkari said it was still too early to “announce we’re done” with rate hikes, but said the Fed should “take the time necessary to have sufficient data » before deciding on a new increase.
According to Fed economists, inflation, both headline and underlying, should continue to decline, with indicators “pointing to a slowing in the rate of increase in house prices as well as non-housing services for the rest of the year”. year 2023”, with inflation expected to fall to 2.2% in 2025.
For Kieran Clancy, economist for Pantheon Macroeconomics, we should expect “an improvement in underlying services inflation” before the next Fed meeting and the data published before the meeting should “play in favor of a break “.
After the publication of the Fed’s report, Wall Street reacted relatively little, its indices remaining close to equilibrium.
The dollar, on the other hand, strengthened a little: the euro was down 0.08% before the publication, but now 0.26%, at 3:10 p.m., at 1.0877 dollars for one euro.
The next Fed meeting is scheduled for September 19-20.
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