Fed begins monetary policy meeting

The Federal Reserve American began its monetary policy meeting this Tuesday, after which it will not modify its rates, according to market expectations, but will present an update of its forecasts for the world’s largest economy.

The meeting of the Monetary Policy Committee (FOMC) “started at 10:30 a.m. local time (2:30 p.m. GMT) as planned“, a central bank spokesperson confirmed to AFP.

The meeting will end on Wednesday with a statement at 2:00 p.m. local time (6:00 p.m. GMT) and the president of the Fed, Jerome Powell, will give his usual press conference half an hour later.

This time, the market will focus on the Fed’s updated economic forecasts, from which clues could emerge about the evolution of interest rates, which remain in a range of 5.25-5.50%, at their highest in more than two decades.

But above all, those responsible for the central bank could establish whether they still think that there will be rate cuts this year and, if so, how many reductions.

The organization acted on interest rates, raising them to make credit more expensive and thus discourage consumption and investment, which put upward pressure on prices.

The Fed pursues an annual inflation target of 2% in the United States. Some data on the cooling of the economy and a decrease in inflation rates encouraged the idea of ​​making monetary policy more flexible so as not to affect economic activity too much. But an inflationary spike at the beginning of 2024 dampened spirits.

The market believes that if there is a cut, it will be in September or even November.

Twelve-month inflation in the United States was 2.7% in April, according to the PCE index, the one preferred by the Fed. The updated consumer price index will be released on Wednesday morning, before the end of the central bank meeting.