At their latest meeting, Fed officials expressed concern about the rebound and the trajectory of inflation, noting that rates would be lowered later than expected, with some members even prepared to raise them if necessary.
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They thus “estimated that it would take them more time than expected to be more sure that inflation evolves sustainably towards (the objective of) 2%”, according to the minutes of the meetings of the American Central Bank (Fed ) from April 30 and 1er may.
Inflation had rebounded in early 2024 after a sharp slowdown in previous months, pushing the Fed to be cautious and postpone the moment to lower its rates.
It had kept them unchanged, at the highest for more than twenty years, between 5.25% and 5.50%.
The members of the Monetary Policy Committee (FOMC), the Fed’s decision-making body, had “expressed their uncertainty regarding the persistence of inflation”, agreeing “that recent data had not reinforced their confidence in the fact that inflation was moving sustainably towards 2%,” we note in the minutes.
They nevertheless “assessed that monetary policy remained well positioned to respond to changing economic conditions and risks weighing on the outlook”.
“Several participants” however said they were ready to raise rates again “if inflation risks materialize in such a way that such a measure becomes appropriate”.
Market players are mainly counting on September for a first decline, according to the CME Group assessment.
Consumer price figures in April, however, provided a glimmer of hope, as inflation resumed its downward trajectory, to 3.4% year-on-year compared to 3.5% in March, according to the CPI index. .
The Fed favors another measure, the PCE index, which also accelerated in March, to 2.7% over one year. April data will be released on May 31.
Several Fed officials have insisted in recent days that this rebound in inflation encourages them to be cautious and that rates risk remaining high for longer than expected.
A governor, Christopher Waller, however estimated Tuesday that “from now on, the probability (remains) very low of having a rate increase” again.
The next Fed meeting will take place on June 11 and 12. Officials will also update their economic forecasts and say what rate changes they anticipate for 2024.
