The Federal Reserve The American Federal Reserve (Fed) considers that interest rates have reached their peak, but leaves the door open to order future increases if economic conditions require it, according to the minutes of its last meeting, published this Wednesday.
According to the minutes, regulators believe that the official interest rate is already “at or near peak for this cycle”.
At its December meeting, the central bank kept rates at their current range, between 5.25% and 5.5%, admitting that inflation has reduced considerably. It was a unanimous decision.
Furthermore, most regulators trusted that “by the end of 2024″the official interest rate will be lower, although they made it clear that the economic situation remains very uncertain.
The expectations that the Fed begin to lower rates this year, they gave a boost to the stock markets in December that led the Dow Jones Industrial Average to record seven historic closes, surpassing 37,000 points for the first time.
However, some analysts warn that optimism is premature and that the situation could worsen if the central bank does not start lowering rates as soon as markets expect.
Depending on the tool FedWatchfrom the CME Group, the majority of investors expect the Fed to begin its reductions starting in March.
In the minutes published today it can be clearly seen that the central bank governors consider the economic situation to be much better than at the beginning of 2023 and point especially to the direction of inflation and the growing balance in the labor market.
By the end of the year, the personal consumption expenditure price index (or PCE, one of the Fed’s preferred inflation gauges) stood at 2.6% year-on-year, very close to the central bank’s 2% target.
However, some regulators considered that it is possible that circumstances force interest rates to be maintained at their current range.for longer than currently anticipated”.
As usual, the members of the Federal Open Market Committee, the body in charge of establishing monetary policy, made clear the importance of analyzing the different economic data, and especially the direction of inflation, before making a new decision on the guys.
The Fed’s next monetary policy meeting is scheduled for later this month.
Source: Gestion
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