The American Central Bank (Fed) on Wednesday maintained its accommodating monetary policy after its first meeting in 2021, stressing that the economic recovery in the United States depended on the developments of the pandemic and the pace of vaccination.
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"The trajectory of the economy will depend significantly on the evolution of the virus, including progress in terms of vaccination"
, commented the Federal Reserve in its press release, published at the end of this meeting, which began on Tuesday and which took place on Tuesday. is completed this Wednesday.
New President Joe Biden aims to have 100 million people vaccinated for his first 100 days.
The Fed also noted that the pace of the recovery in activity and employment has weakened in recent months.
It has, as expected, maintained its rates in a range of 0 to 0.25%.
It had lowered them to this level in March, when the pandemic had brutally slowed the US economy.
First meeting under Biden
This first meeting of 2021 was also the first since Joe Biden arrived at the White House just a week ago, which should mark a return to more traditional relations with the powers that be.
The powerful Federal Reserve, during the four years of Donald Trump's presidency, had to fight to maintain its independence, in the face of frequent intrusions from the president.
Fed Chairman Jerome Powell and Janet Yellen, the new Treasury Secretary, have worked together before.
All eyes are now on the press conference that Jerome Powell is due to give around 2:30 p.m. (7:30 p.m. GMT).
Any comments on the new administration, on the economic implications of the English variant of Covid-19 or the distribution of vaccines, will be closely scrutinized.
Jerome Powell could also bring up the situation on Wall Street of GameStop, a chain of video game stores whose stock prices have climbed at an astounding rate, a rise fueled by a group of stock marketers crusading against the
"establishment"
.
Return of inflation?
He could also be asked about a fear that resurfaces after years of absence: that of inflation.
The mini economic boom expected in the spring or summer thanks to widespread vaccination of the American population, could indeed temporarily increase prices.
Inflation could pose a dilemma for the Fed, which has been saying for months that it does not consider a short-term normalization of its monetary policy.
Read also: Covid-19: the United States will move closer to collective immunity by the summer, according to Biden
The rates will remain at zero until
"labor market conditions have reached levels consistent with what the Committee judges to be maximum employment and inflation has risen to 2% and is on track." exceed 2% ”
.
Observers are, however, wondering about the $ 120 billion per month asset purchase program, which has flooded the financial markets with liquidity since mid-March, pushing stock indices to record highs despite the Covid-19 pandemic .
The Fed said on Wednesday it was maintaining these actions.
Discussions around Biden's emergency plan
Jerome Powell and other Fed officials, like a majority of economists, have been warning for months about the need to inject money back into the economy, both to households and enterprises.
He will undoubtedly be questioned on the subject during the press conference.
It
"should support a budgetary stimulus in general, while avoiding being more specific on the amounts,"
anticipates Steve Englander, economist for Standard Chartered.
If both Janet Yellen and Jerome Powell believe that additional aid is necessary,
"this will put pressure on Republican senators to temper their opposition"
to an envelope they consider a little too big, he said.
The $ 1.9 trillion emergency plan proposed by Joe Biden, and already widely defended by Janet Yellen, should, if passed in Congress, bring some optimism for the coming months, which promise to be difficult pending wide dissemination of the vaccine against Covid-19.
The meeting concludes on the eve of the publication of the GDP of the United States for the fourth quarter of 2020. Growth, which had recorded a historic plunge in the second quarter, then an equally historic rebound in the third, should mark time.
