The American central bank (Fed) must “resist the temptation to act quickly when patience is necessary,” one of its officials said on Friday, thus in turn warning against the risk linked to a premature start to the decline rates.
“We must resist the temptation to act quickly when patience is needed and be prepared to respond with agility as the economy evolves,” San Francisco Fed President Mary Daly said in a speech in Washington.
Many Fed officials have warned in recent weeks that starting monetary policy easing too soon could cause inflation to rebound.
“We can take a more gradual approach. But that doesn’t mean slow, it doesn’t mean weak,” Mary Daly emphasized: “It just means not acting abruptly and urgently when you’re faced with a lot of uncertainty and the policy is already very good. positioned”.
She warned that the fall in rates would be slower than their rise: “I expect that in such an uncertain world, we will not have the same cycle of easing as that of tightening (…) which was fast, one of the fastest in history.”
Mary Daly thus welcomed the progress made on the inflation front, but clarified that “progress is not victory”.
“Perhaps most striking is the confidence shown by households, businesses and markets that progress on inflation will continue,” she commented.
But we must also be careful not to wait too long, she stressed: “Slowing progress on inflation is not the only risk we face. On the other hand (…), the labor market could weaken”, although this is not the case “for the moment”.
“The challenge we always face is that the job market is good until it’s not,” she said.
The Federal Reserve, after raising rates to their highest level in more than 20 years to curb high inflation, now plans to start lowering them in the coming months.
Its chairman Jerome Powell has repeatedly considered it unlikely that the monetary policy committee will have reached by then a sufficient level of confidence in the trajectory of inflation, for a first reduction to be decided at the next meeting, in March.