The U.S. central bank (Federal Reserve, Fed) is expected to accelerate rate hikes in coming months, with several officials in favor of it in order to combat high inflation in the United States, according to the minutes of the meeting of 15 and 16 March, released Wednesday.
Many participants pointed out that one or more hikes of 50 basis points (half a percentage point, editor’s note) (…) might be appropriate in future meetings, particularly if inflationary pressures remain high or ease. intensify, is it indicated in this document.
The Fed had begun, during this meeting, to raise its rates, but had opted for a more modest increase, of only a quarter of a percentage point.
Many participants (…) would have preferred an increase of 50 basis points, depending on the minutes, but a number of them indicated that in light of greater short-term uncertainty associated with the invasion of the Ukraine by Russia, they felt that a 25 basis point increase would be appropriate at this meeting.
The rates, which had been in a range of 0 to 0.25% since March 2020, are therefore now between 0.25% and 0.50%.
But it could be appropriate to quickly return to so-called neutral rates, that is to say around 2 or 2.50%, according to the members of the Fed’s monetary committee.
To slow inflation, the Fed also plans to part little by little with the billions of dollars of Treasury bills and other assets it has purchased since March 2020. These have more than doubled the size of its balance sheet, which now stands at around 8.9 trillion dollars, compared to 4.1 trillion in February 2020.
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The leaders of the powerful Federal Reserve had indeed agreed at their March meeting that it might be appropriate to begin this process at a future meeting, perhaps as early as May, is it still accurate within minutes.
Inflation in the United States is at its highest for 40 years, 6.4% in February according to the PCE index, favored by the Fed, and 7.9% according to another index, the CPI, used in particular for the indexation of pensions.
And the rise in prices should accelerate further in the months to come.