The American Central Bank, the Fed, lowered its rates by a quarter of a percentage point on Thursday, the day after the re-election of Donald Trump which could herald tumultuous days for the monetary policy institution.
This new cut places rates in the range of 4.50 to 4.75%. It comes after that of half a point in September – the first since March 2020.
The Fed meeting began on Wednesday, a day late than the usual schedule, due to the presidential election won by Republican Donald Trump.
“In the short term, the elections will have no effect on our decisions,” said Fed Chairman Jerome Powell during his press conference.
“We don't know what the timing and type of reforms will be and therefore we don't know what the effects on the economy might be. We don't guess, we don't speculate, we don't assume,” he said. he continued.
Jerome Powell, however, refused to comment on a possible weakening of the independence of the Fed under this new Trump administration.
The Republican billionaire was in fact accustomed to interference in monetary policy during his first mandate, and recently felt that he should have “his say” in the decisions taken by the institution.
– “Non” –
Jerome Powell also assured that he would not resign before the end of his mandate if the White House asked him to do so. When asked during the press conference, he simply replied “no”.
Before specifying that the law “does not allow” the dismissal of the governors of the powerful institution.
These comments come as Donald Trump signaled in July, after sowing doubt, that he would let Jerome Powell complete his term as Fed chairman, which ends in May 2026. His term as governor, which is separate, ends in January 2028.
Jerome Powell was chosen in 2012 by former Democratic President Barack Obama to join the Board of Governors of the Federal Reserve, then Donald Trump himself promoted him to president in 2018.
On the economic front, the president of the Fed praised the vitality of the American economy: “the economy is generally solid (…). The labor market has relaxed after being overheated and has remained solid” .
“Inflation has fallen considerably,” he added, but “the work is not finished”, it remaining above the objective of 2% over one year.
The Fed lowered inflation by raising rates to slow demand. It fell in September to its lowest level since February 2021, to 2.1% over one year, according to the PCE index, favored by the Fed.
The increases in customs duties promised by Donald Trump could, however, cause inflation to rebound.
The prospect of further rate cuts, with Donald Trump's victory, supported the New York Stock Exchange on Thursday, which closed higher.
Washington recently released a series of indicators showing solid economic activity, but moving away from post-Covid euphoria.
GDP (gross domestic product) growth in the third quarter disappointed, but remains almost twice as strong as that of the euro zone, at 2.8% at an annualized rate.
Job creation was very weak in October, due to hurricanes and strikes, particularly at Boeing.
The decision to cut rates was made unanimously by the FOMC, which did not update its economic forecast this time, with the next update expected at the next meeting in December.
Across the Atlantic, the Bank of England (BoE), which also met on Thursday, lowered its key rate by a quarter of a point, for the second time this year, to 4.75%.
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