“Labor market conditions have been easing overall” for several months, after a period of labor shortage which had contributed to pushing prices upwards, commented the FOMC in a press release published Thursday, following a meeting that began Wednesday morning. As for inflation, which the Fed brought down by raising rates to slow demand, it “has made progress in its return to the 2% objective (…) but remains high”.
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. To slow it down, the Federal Reserve raised its rates to their highest since the early 2000s, and kept them at that level for more than a year, until September.
When Donald Trump attacked Jerome Powell
But Donald Trump has promised to impose widespread increases in customs duties, which risks causing inflation to rebound. “The election result reduced the possibility of a further decline in future meetings,” said Samuel Tombs and Oliver Allen, economists for Pantheon Macroeconomics.
Federal Reserve Chairman Jerome Powell has assured that he will not resign, even if President-elect Donald Trump asks him to do so. “No,” Jerome Powell, whose term ends in 2026, simply replied to the question of whether he would leave if the president-elect made a request to do so. “No,” he repeated when asked if he thought he would be legally obligated to leave in such a scenario.
The Republican billionaire has repeatedly attacked the president of the Fed, whom he had appointed to this position during his first term, accusing him in particular of seeking to favor Kamala Harris, the unsuccessful Democratic candidate, through his decisions. , and implying that he would replace him if he was elected again. However, he revised his remarks, subsequently ensuring that he would let Jerome Powell complete his mandate.
Donald Trump does not legally have the capacity to fire him, nor even any of the members of the college of governors of the Fed, assured the president of the institution.
A “soft landing”
Washington recently released a slew of indicators showing solid economic activity, 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.
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, due to hurricanes which hit the country and several strikes, notably at Boeing.
For Jim Bullard, now dean of the Daniels School of Business at Purdue University, the Fed achieved a “soft landing”: a drop in inflation without causing a recession. The Federal Reserve did not update its economic forecasts this time. They will be updated 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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