Fears of a return to inflation remain high in the United States, and all eyes are now on the Fed, watching for any sign of its intentions, although it has repeatedly said it needs to. more to tighten monetary policy.
No decision is therefore expected from the meeting of the Monetary Committee of the American Central Bank on Tuesday and Wednesday.
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"
I am sure that the Fed will remain determined to keep the rates where they are, to remain accommodating
", thus commented for AFP Robert Frick, economist for the Navy Federal Credit Union.
"
I think absolutely nothing will happen
," he said.
Because Fed officials keep reminding them: it will take more than a slightly sharp rise in prices for a few months to make them tighten their monetary policy, believing that this would jeopardize the economic recovery.
So until full employment returns and inflation goes over 2% "
for a while
", rates should not take off from the 0 to 0.25% floor they are at. for a year now.
And asset purchases, which keep markets functioning well by injecting liquidity into them, should not be reduced either.
"
Too bad for the markets
"
Inflation speculation has boosted Treasury yields in recent weeks, which even hit a high since February 2020 on Friday. But the Fed has signaled it will not act, disappointing some expectations.
“
I think at this point, it's 'too bad for the markets',
” said Robert Frick.
Little surprise to be expected from the Fed therefore, while the European Central Bank (ECB) made the surprise announcement Thursday of an acceleration in debt purchases.
In the eyes of the ECB, maintaining accommodative financial conditions to support the recovery is a priority over the very slight rise in its inflation forecasts.
The officials of the powerful Federal Reserve will "
do their best to continue to say nothing,
" said Danielle DiMartino Booth, CEO and chief economist of Quill Intelligence.
"
I think they will try to take the middle road, neither raising nor lowering expectations in terms of monetary policy,
" she adds.
However, observers will watch for the slightest signal that can be sent, and the devil will hide in the subtleties of language used by the Fed, which weighs every word of the statement released Wednesday after the meeting.
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The cohesion within the leaders of the Central Bank could also distill some clues, such as unanimity on maintaining interest rates.
If a single leader stands out on this point, "
that does not mean that the policy will change, but that there is a crack in the consensus, which will widen in the months to come
", according to Robert Frick.
Forecasts
Fed officials will also update their forecasts for the coming years.
They will thus say what evolution of the GDP and the unemployment rate they anticipate, but also what inflation rate they foresee.
The latter should "
turn around 3%
" in the spring, over one year, "
because of the rise in gasoline prices
", and 2.5% excluding energy and food, according to Kathy Bostjancic , of Oxford Economics.
“
But after this jump in the spring, we think that inflation will be moderate, and will remain below 2%,
” she adds.
Fears of a return to inflation are fueled by the economic boom expected in the spring, thanks to vaccination and the $ 1.9 trillion emergency plan signed Thursday by Joe Biden.
This should push prices up, especially since the comparison will be made against March and April 2020, when, in the face of the first massive containment measures in the country, prices had fallen.
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Many economists, including Fed Chairman Jerome Powell, believe that this price hike will only be temporary.
But others fear an escalation and were waiting for action from the Fed to stop this infernal machine, including a rate hike faster than expected.