The American Federal Reserve (Fed) kept its interest rates unchanged on Wednesday after its last meeting, reporting the “lack of progress” on the inflation front. It will deflate the volume of assets on its balance sheet less quickly from June.
The Fed is thus keeping its rates at the highest in more than twenty years, between 5.25 and 5.50%, a range within which they have been moving since July, it announced in a press release published at the end of his meeting.
This has the effect of maintaining high interest rates on home loans, but also on credit cards and even car loans. This monetary policy aims to try to prevent prices from continuing to rise.
2% target not reached
The Monetary Policy Committee (FOMC) specifies that “in recent months, there has been a lack of further progress towards the objective” of 2% inflation. According to this committee, inflation “seemed to be on the right trajectory” but it has started to rise again since January.
In March, it stood at 2.7% over one year, according to the PCE index favored by the Fed.
Markets, which were full of hope that rates would start to fall in June, are now betting instead on September, or even November, according to an estimate from CME Group.
Monetary policy “sufficiently restrictive”
Central Bank President Jerome Powell warned at a press conference that it would probably take “more time than expected” before there was confidence in the decline in inflation. Rates will therefore remain high for longer, but he refrained from any prediction on when they will begin to decline.
However, he judged it “unlikely that the next movement on rates would be an increase”, monetary policy being already “sufficiently restrictive” over time, according to the Fed.
At the time, this made Wall Street jump. The New York Stock Exchange ended in disarray, with most large companies progressing at uneven levels, according to quarterly results published in parallel.
jop with agencies