Washington (awp/afp) – A majority of officials at the US central bank (Fed) at the end of July opened the way for a reduction in the institution’s interest rates at the next meeting scheduled for mid-September, considering , that data from inflation allowed it.
At the Fed’s last meeting on July 30 and 31, “several members emphasized that recent progress in combating inflation and rising unemployment argued for a 25 basis point cut” during the September meeting, according to the minutes(s) of the Fed Monetary Committee (FOMC) published on Wednesday. However, this opinion was not a majority.
But “the vast majority emphasize that if the data continues in the expected direction, it will probably be appropriate to ease (monetary) policy at the next meeting.”
The minutes also point to FOMC members’ “confidence” in data that “underlines that inflation is moving toward the target” of 2%.
The US markets have shown signs of nervousness in recent weeks, notably marked by a sudden drop on Wall Street about ten days ago, due to concerns about a possible risk of recession in the country.
Fed Chairman Jerome Powell is expected to address the issue at the annual central bank meeting in Jackson Hole, Wyoming, starting Friday and continuing through the weekend.
The vast majority of analysts expect an initial rate cut of 0.25 percentage points in September, then regular cuts at the following two meetings before the end of the year, according to the group’s FedWatch monitoring tool.
After a continued decline in 2023, US inflation saw a small recovery in early 2024 before easing slightly, effectively postponing a first downward move in interest rates initially expected by markets in the second quarter of the year.
But prices appear to have resumed a slowing pace to move closer to the Fed’s long-term 2% target, while the US unemployment rate has at the same time risen slightly to 4.3%.
The Fed has a dual mandate, keeping price increases around the 2% target combined with a full employment target.
Over the past two years, historically low unemployment in the US has made it possible to focus solely on the fight against inflation, which had risen to 9.5% per year by mid-2022.
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