Rates are currently in the range of 4.75-5.00%. A cut of a quarter of a percentage point is mostly anticipated by the markets.
The American Central Bank, the Fed, is expected to announce a new rate cut on Thursday, a movement initiated in September thanks to the fall in inflation, and which should continue the day after the re-election of Donald Trump.
“We still expect a decline, at least in November,” said Diane Swonk, chief economist for KPMG, in an interview with AFP.
Rates are currently in the range of 4.75-5.00%. A cut of a quarter of a percentage point is mostly anticipated by the markets, according to CME Groupe’s assessment.
The meeting of the Monetary Policy Committee (FOMC) began Wednesday morning, and not Tuesday morning as is usually the case, postponed by one day due to the election.
The decision will be released on Thursday at 2:00 p.m. (7:00 p.m. GMT) and Fed Chairman Jerome Powell will hold a press conference 30 minutes later.
Donald Trump’s victory, announced Wednesday morning a few hours before the start of the Fed meeting, should not influence the decision.
“The Fed is unlikely to change course in the short term: it will not adjust its policy in anticipation of policies that have not yet been unveiled by the new administration,” commented Ben May, director of macroeconomic research. for Oxford Economics.
Customs duties
Donald Trump has promised to impose widespread increases in customs duties, which risks causing inflation to rebound. Much to the chagrin of the Fed, which is struggling to lower it.
“The election result reduced the possibility of a further decline in the next meetings,” said Samuel Tombs and Oliver Allen, economists for Pantheon Macroeconomics.
And Jerome Powell “will be careful not to give strong signals on the future direction of monetary policy during the press conference”.
Diane Swonk expects Fed officials to leave “the door open for a cut (in December), but with a high level of uncertainty in terms of economic performance and inflation.”
The Federal Reserve began in September, during its previous meeting, to lower its rates, which it had maintained since July 2023 at their highest level in more than 20 years, in order to bring down inflation.
For this first cut since March 2020, she opted for a reduction of half a percentage point.
“Resilient” economy
Washington recently published a slew of indicators, showing a solid economy, but moving away from post-Covid euphoria.
“Generally speaking, the American economy seems quite resilient and the job market still very good,” Jim Bullard, former president of the St. Louis Fed, told AFP in an interview before the elections. .
GDP growth in the third quarter disappointed, but remains almost twice as strong as that of the euro zone, at 2.8% annualized.
Job creation in October was at its lowest since December 2020, but this is mainly due to the hurricanes which hit the country and several strikes, notably at Boeing.
Inflation has evolved in the right direction, falling in September to its lowest level since February 2021, at 2.1% over one year, according to the PCE index, favored by the Fed, which wants to bring it back to 2%. , a level considered healthy for the economy.
For Jim Bullard, the Fed achieved a “soft landing”: a drop in inflation without causing a recession.
Now dean of the Daniels School of Business at Purdue University, he also expects a quarter-point drop on Thursday and another during the following meeting, mid-December.
However, the Fed will not update its economic forecasts this week, which will be updated in December.
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