A third increase of three-quarters of a percentage point is expected. But nearly one in five market players even expects a one percentage point increase.
The Monetary Policy Committee of the US central bank (Fed) began its meeting on Tuesday noon, after which a new sharp rise in key rates should be announced to fight against very high inflation in the United States.
“The meeting of the Monetary Policy Committee (FOMC) began at 1:00 p.m. (5:00 p.m. GMT) as scheduled,” a spokesman for the Federal Reserve (Fed) told AFP.
Discussions will end on Wednesday at midday. A press release will be issued at 2:00 p.m. (6:00 p.m. GMT), then the president of the institution, Jerome Powell, will hold a press conference at 2:30 p.m. (6:30 p.m.).
At this meeting, the Fed will update its forecasts for GDP growth, inflation and the unemployment rate.
And, for the fifth time since March, it will raise its key rates, in order to slow down inflation. These set the tone for commercial banks to establish the interest rates for their loans to individuals and professionals. They are currently in a range of 2.25 to 2.50%.
A third increase of three-quarters of a percentage point (75 basis points) is expected. But the rise could be even stronger: nearly one in five market players even expect a one percentage point rise, according to CME Group’s futures product valuation.
The purpose of the rate hikes is indeed to slow down economic activity, in order to ease the pressure on prices, while inflation admittedly slowed in August thanks to the drop in gasoline prices, but remained much stronger than expected, at 8.3% year-on-year, with a general rise in prices.
This deliberate slowdown in the economy, which will no doubt be accompanied by a rise in the unemployment rate, is all the more delicate to carry out as the recession threatens the American economy, and, more broadly, the world economy.
The excellent health of the labor market, however, gives the Fed room to be aggressive, and hope to achieve the “soft landing” it is aiming for. The unemployment rate in the United States is 3.7%, one of the lowest in 50 years, and there are not enough workers to fill all the vacancies.