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The Fed won’t cut rates until inflation falls sustainably toward 2%.

The Fed won’t cut rates until inflation falls sustainably toward 2%.

The Federal Reserve (Fed) It will not reduce interest rates until it is sure that inflation falls “sustainably” towards the 2% objective, according to the minutes of its last meeting held at the end of January and published this Wednesday.

Members of the Federal Open Market Committee (FOMC) unanimously agreed that they did not expect it to be “appropriate” to reduce rates until they had gained “greater confidence that inflation is moving sustainably toward 2%.” ”.

“All members affirmed their firm commitment to returning the inflation to the 2% target”point out the minutes of the meeting of the US regulator held on January 30 and 31, in which it decided to maintain rates in the range of 5.25% and 5.5%, its highest level since 2001.

In their discussion of inflation, FOMC members noted that prices had declined over the past year, with improvements in both headline and core inflation, but they remain “concerned” and will “carefully evaluate” the economic data. to judge whether inflation is falling sustainably.

On February 13, it was known that the inflation rate in USA It fell again in January, after rising in December, and fell three tenths, to 3.1%.

Core inflation, a key data that the Federal Reserve analyzes for its interest rate decisions, remained at 3.9% in year-on-year terms.

At the press conference following the Fed’s announcement, the chairman of the Federal Reserve, Jerome Powell He said that if the economy evolves “broadly as expected, it will probably be appropriate to begin reducing rates at some point this year.”

“We think our policy rate is probably at its peak for this tightening cycle,” aspot.

The decision of the Fed It was known a few days after the United States announced that it closed 2023 with a growth in Gross Domestic Product (GDP) of 3.1%, thanks to increased consumer spending despite inflation.

The figure is higher than estimated by economists and higher than the 2.1% of the growth recorded in 2022, the year in which the world’s first economy suffered a technical recession.

GDP is one of the data that the regulator closely analyzes, along with unemployment, which in January remained at 3.7% for the third consecutive month.

The net creation of new jobs rose again in the first month of the year and 353,000 were created, 20,000 more than those generated a month before, a figure that shows that the labor market is not cooling.

Source: Gestion

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