Overwhelmed by the biggest price increase in nearly forty years, the American central bank wants to convince that its priority is now the fight against inflation.
At the end of a two-day meeting of its monetary committee, the Federal Reserve takes another step towards abandoning its public debt buybacks.
She is correcting the course she set at the beginning of November.
Instead of aiming for next June to completely abandon this policy intended to combat the risk of deflation, the Federal Reserve is advancing by three months, until next March, the probable end of the support program.
This year, it will have been used to directly buy back more than half of the additional debt issued by the Treasury.
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Inflation increases pressure on the Fed
Jerome Powell and his colleagues, eager for months to achieve full employment, are widely criticized for having underestimated the soaring price which reached 6.8% over twelve months.
Stung, a majority of them now suggest that the other pillar of their exceptionally accommodating policy, the key rate held at zero since March 2020, could be raised at least three times next year.
They nevertheless condition any rate hike upon arrival to
"employment levels consistent with maximum employment".
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Last September, half of the twelve members of the Fed's monetary committee did not consider probable in 2022 a first increase in this rate at which American banks are lending liquidity in the very short term.
Since then, the situation has changed.
While annual growth seems close to 5%, while unemployment has fallen to just 4.2%, the key rate will remain at zero in 2022 is increasingly unlikely.
Record imbalance
The Fed is admittedly still anticipating a reduction in 2022 in shortages of materials, components and labor which aggravate the rise in prices. However, it no longer has sufficient margin to bet that the outbreak will stop on its own. Wholesale price inflation, climbing to 9.6% year-over-year, shows increases are shifting from goods to services, including transportation, or rents. In addition, the desire of the White House and the narrow Democratic majority in Congress to increase social spending sustainably is expected to have inflationary effects. Finally,the record imbalance between the number of unfilled job vacancies - around 11 million - and the effective demand for work from a population traumatized by the pandemic and containment also maintains wage increases, not offset by productivity increases. Another factor of inflation.