Washington (EFE).- The US Federal Reserve (Fed) begins its meeting on monetary policy on Tuesday, after which it is expected to announce the eighth consecutive rise in interest rates, which could be less than the previous ones.
The members of the Federal Open Market Committee of the Fed (FOMC, in English) debate until this Wednesday, when the decision will be announced, if they continue to slow down the rate hike.
They already did so in the last increase, that of December 14, when they decided to increase the rates by only half a point, compared to the four consecutive increases of 0.75 points carried out since March 2022.
The Fed plans to continue to hit the brakes, economists forecast, and the new hike could only be a quarter of a point.
Since it reached its peak in June (9.1%), inflation has eased to 6.5% and in December it fell for the sixth consecutive month, a figure that analysts say is a sign that rate rises are beginning to have an effect on the US economy.
However, from the Fed -which operates as a central bank in the United States- they have continued to insist that it is not yet time to stop and that rates will continue to rise in the coming months, until “a monetary policy that is restrictive enough to return to 2% inflation.
This was announced by the president of the Fed, Jerome Powell, at the press conference for the December announcement, an increase that left rates in a range of between 4.25 and 4.5, their highest level in 15 years.
According to what was known a few days ago after the publication of the minutes of the December meeting, several members of the FOMC warned that a slowdown in the rate of increases is not a sign that they are going to end.
Several participants emphasized that it would be important to communicate clearly that a slowdown in the pace of rate increases is not indicative of a weakening of the Committee’s resolve to achieve its price stability objective or a judgment that inflation is already underway. a persistent downward path”, pointed out the text.
It is still unknown what the ceiling that interest rates can reach will be. In the opinion of the chief economist of AXA Investment Managers, Gilles Moëc, the peak will be 5% and will be reached in March.
Moëc anticipates “a rise of 0.25 points” this Wednesday, “in line with the consensus”, and points out as crucial the tone that Powell will show in his speech.
So far this cycle, remember, the Fed has already raised 425 basis points in 9 months, and “a total effort of 500 basis points is expected, with cuts only about 2 years after the first hike.”
The FOMC is in charge of deciding whether to raise or lower interest rates and is made up of the seven members of the Fed’s Board of Governors (its main body), the president of the New York Fed, and four other regional Fed presidents. They rotate every year.
These meet about eight times a year to discuss the country’s monetary policy, although the meetings can be increased if the situation requires it.