2023-10-11 19:19:44
(Washington) The question for the American central bank (Fed) is now no longer how high rates will rise, now at or near their peak, but how long to maintain them at this level, the highest in more than 20 years old.
“Several” Fed officials “have noted that […] decisions and communications” of the institution “should focus more on the duration of maintaining the key rate at restrictive levels rather than on the level of increase in the key rate”, reports the minutes of the last meeting of the Fed, September 19 and 20, published Wednesday.
The Fed’s Monetary Policy Committee had, during this meeting, kept rates in the range of 5.25 to 5.50%, warning however that it may be necessary to raise them again by the end of the year.
After 11 increases since March 2022, and rates which have, in total, increased by more than 5 percentage points, these have now reached their peak, or almost.
“All participants (in this meeting) agreed that policy should remain restrictive for a certain period of time until the (FOMC) is convinced that inflation is falling sustainably towards its objective” of 2%, detail the minutes.
The need to raise the rate further by the end of the year, however, is not unanimous among Fed officials: “a majority of participants estimated that an additional increase […] would probably be appropriate.
Several of them have, in recent days, reiterated this point of view, faced with inflation that is still too high, and while the solidity of the American economy could allow it to absorb this tightening without falling into recession.
Two regional Fed chairs also said tighter monetary conditions caused by rising Treasury yields could have a similar effect.
The CPI inflation index, on which pensions are indexed, will be published on Thursday for the month of September. After starting to rise again this summer, it should resume its decline, and settle at 3.6% over one year, against 3.7% last month, according to the MarketWatch consensus.
The PCE index, favored by the Fed, will be published later in the month, just before the next meeting of the central bank, on October 31 and 1is November.
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