In the United States as in Europe, inflation is running out of steam. It peaked at 9% in the United States, it is now only 5%; in the euro zone, we went from 10.6% to 7%. But she is still there, well established. A final hike in interest rates therefore seems necessary. It will be the “last of the last” predict financial analysts on both sides of the Atlantic. They are much more divided on the scale of this new increase in key rates. Should they be increased by a quarter or a half point to contain the rise in prices without damaging growth too much? The debate obviously divides the governors.

In the United States, the rates are already very high

They are between 4.75 and 5%. This is two points more than in the euro zone. In the United States, the rise in rates was ultra-rapid, unheard of for forty years, and it was effective. But the official target, a price increase of around 2%, is far from being achieved, so the pressure must be kept up. To make its decision the Federal Reserve will have figures on the evolution of credit, they will see if the American banks have tightened the conditions for granting credit or not. In a country where employment remains strong, a slight cooling of the economy seems bearable, but this prospect worries the markets. This morning, the Asian stock exchanges are oriented downwards, because they bet on a rise in US rates of a quarter harmful to growth. Investors are convinced that the Fed’s policy is leading the United States straight into recession.

The banks’ malaise is the other issue that concerns Fed Chairman Jerome Powell

A malaise of the banks still hyper-sensitive, yesterday, on Wall Street. Two regional banks have paid the price, their courses have seriously unscrewed by 20 and 40% in one session. In barely two months, three American banks narrowly avoided bankruptcy thanks to the intervention of the authorities. These promptly carried out operations should have, might have reassured the markets, in fact, they are convinced that other weak links threaten to collapse and they seek to identify them. It’s hard for the Fed not to take this feverishness into account. It is precisely its policy of tightening credit that has weakened these banks. Jerome Powell will therefore have to choose his words carefully to explain his decision and reassure as much as he can regarding the solidity of the financial sector.

In Europe, the picture is much more mixed

The situation of European banks is much better. And the ECB’s policy has begun to produce its first effects. We learned yesterday that they have tightened the conditions for granting credit. Moreover, the inflation figures in the euro zone published yesterday are rather encouraging. Headline inflation is still on the rise because food prices continue to rise, but core inflation, ie excluding energy and food, has fallen for the first time since January. This good news pleads in favor of moderation, but inflation remains high at 7%, and in the Baltic countries, it is still double. The European Central Bank has therefore not finished its work. It will probably continue with a moderate rise in rates, a rise of a quarter of a point is expected.