Fed meeting begins with expectation of stable rates

The Federal Reserve (Fed, central bank) of the United States began this Tuesday a new meeting of monetary politics two days, during which, according to market expectations, it could keep its reference interest rates stable.

The meeting of the Monetary Policy Committee (FOMC) “started at 10:30 (14:30 GMT) as planned“a Fed spokesperson told AFP. The meeting will end on Wednesday afternoon.

The decision on rates will be announced at 6:00 p.m. GMT in a statement, which will be followed by the update of the economic forecasts for GDP, inflation and employment, ending with a press conference by the president of the bank, Jerome Powell, half an hour later. late.

The consensus among market players is that the Fed will maintain its rates in a range of 5.25-5.50% after 11 successive increases with which the entity sought to contain inflation.

Raising rates means making credit more expensive and discouraging consumption and investment, which puts upward pressure on prices.

In August, inflation rose for the second consecutive month to stand at 3.7% in 12 months, according to the CPI published on Wednesday of last week.

In terms of employment, a market closely watched by Fed, the situation seems to be balanced after two years of labor shortages. The unemployment rate came out of the historical low and stood at 3.8% in August, thanks to new workers in the market.

In addition, consumption, the engine of the economy, shows some signs of weakness, with expenses “modest” in the northern summer, according to the “Beige Book”, a survey carried out by the Fed.

American families are extinguishing their savings accumulated during the pandemic and therefore leaning on each other “more on credit to finance your expenses“, according to Fed.

Credit costs more and that leads to deferring some purchases or simply discarding them.

Additionally, in October millions of Americans will return to repay their student loans after a two and a half year pause due to the COVIDwhich will predictably reduce their purchasing power.

Source: AFP