(Washington) The American central bank (Fed) started its meeting on Tuesday morning, at the end of which it could, for the first time since March 2022, not raise its rates, while inflation slowed sharply in May .
The FOMC meeting “started at 10:30 a.m. as scheduled,” a Fed spokesman told AFP.
The Fed’s decision will be announced Wednesday at 2 p.m. in a statement. The president of the institution Jerome Powell will then hold a press conference.
Shortly before Federal Reserve officials’ talks began on Tuesday morning, inflation figures for May were released: down to 4.0% year on year, from 4.9% in April, it is now at lowest since March 2021.
This could convince Federal Reserve officials to pause after ten successive hikes in the main policy rate, which has climbed 5 percentage points since March 2022 to settle in the 5.00-5.25% range. .
Some Fed officials had already expressed support for this scenario, which would allow time to observe the evolution of the economy.
This “would allow us to observe more data before making decisions on the magnitude” of the hikes still necessary, explained Philip Jefferson, one of the governors of the Fed and future vice-president if the Senate confirms his appointment.
Almost all market participants now expect rates to remain at the same level, according to CME Group’s assessment. This share has risen sharply since the publication of the inflation figures.
A pause would prevent too much monetary policy tightening, which could trigger a recession.
Especially since the spring banking crisis has made banks more cautious about loans, which acts as a rate hike.
The Fed favors another measure of inflation, the PCE index. This is published at the end of the month. In April, it started to rise again, to 4.4% over one year, and it wants to bring it back to 2.0%, a level considered healthy for the economy.
