WASHINGTON (Reuters) – The Federal Reserve (Fed) could anticipate stronger growth for 2025 than the figure projected in September, an increase which would be linked primarily to the resistance of the American economy rather than to the election of Donald Trump.
The president of the central bank, Jerome Powell, actually declared that it was still too early to be able to take into account the measures that the 47th American president will put in place and which have not yet been detailed.
“We take Chairman Powell and the Monetary Policy Committee at their word that they will decide monetary policy based on actual changes to fiscal, trade, and immigration policies, not in anticipation” of these measures, write the economists at Morgan Stanley.
The central bank’s projections, which will be published on Wednesday with its monetary policy decision, should be marked by stronger growth for 2024 than announced in September, lower disinflation this year and next and fewer rate cuts. than expected, economists estimate.
For 2025, the Fed expects growth of 2% according to its September forecast, but economists surveyed by the Philadelphia Fed have since raised their forecasts from 1.9% to 2.2%.
Since the central bank’s latest projections, the U.S. economy has been surprisingly resilient and several monetary policymakers have said they favor more cautious monetary easing as inflation remains persistent and the labor market more resilient than previously. expected.
Total PCE inflation thus reached 2.3% in October year-on-year, in line with the central bank’s forecasts, but underlying inflation should reach 2.8% at the end of the year, a pace which could continue into early 2025 and which would be higher than the Fed’s expectations.
Conversely, the unemployment rate, at 4.2% in November, is lower than the forecasts of the central bank which expects 4.4% for the fourth quarter. Analysts estimate that this forecast would be revised downwards by 0.2%.
In this context, monetary policy makers would revise downwards the number of rate cuts, with analysts expecting a median projection of 75 points of rate cuts in 2025, as expected by the financial markets. Some are even betting on a 50 basis point drop next year.
For 2026, the key rate projection could be raised to 3.4% or 3.1%, compared to 2.9% projected in September and which corresponds to the terminal rate of the American central bank, from which it would stop easing its monetary policy.
The Fed could signal that this terminal rate would be higher, some analysts believe, which would also justify a more cautious approach.
(French version Corentin Chappron, edited by Blandine Hénault)
