The central bank of the United States opens the way for a rate rise – Boursorama

The chair of the Fed Janet Yellen, the September 21, 2016 in Washington ( AFP / SAUL LOEB )

The chair of the Fed Janet Yellen on September 21, 2016 in Washington ( AFP / SAUL LOEB )

at the end of a two-day meeting in Washington, its monetary policy committee (FOMC) has, unsurprisingly, decided to keep its key interest rates in their current range (between 0.25 and 0.50%), suspending once again the normalisation of monetary started in December last year after seven years of zero interest rate policy.

But, again, the central bank now provides that the arguments in favour of a new increase are “enhanced”, even if she says wait “for the moment” further progress towards its two main goals, full employment and annual inflation oscillating around 2%.

To support this diagnosis, the FOMC notes that u.s. economic activity has recently been “accelerated” after having experienced a growth “modest” during the first half of the year.

In its press release, it also ensures that the job gains were “solid” with an unemployment rate of 4.9% and household consumption expenditure, the engine of growth in the us, have “greatly” increased.

After you have asserted that the short-term risks had “diminished”, the FOMC also ensures that they now seem to overall “balanced”.

- A single up -

Trapped by the markets, worried about the end of the era of the money not expensive, a monetary tightening seems well to the agenda of the Fed, even if its members do not now suggest that a majority of only one to increase before the end of the year, while they were calling for earlier on two bearings, according to projections, also released Wednesday.

“We are generally satisfied to see how the U.s. economy behaves,” said the president of the Fed Janet Yellen. “Most of us” in the Committee “believe that the arguments for an immediate increase in have increased but it is more appropriate to wait to see more progress,” she said, repeating that the economy was not overheated”.

The chair of the Fed Janet Yellen (d), on September 21, 2016 in Washington ( AFP / SAUL LOEB )

This line however was not unanimity in the monetary Committee. A sign of the divisions growing among its 10 voting members, three of them have refused to support the decision Wednesday and would have preferred that the central bank back its rates by 0.25 percentage points from now on.

such A level of division within the institution has not been seen since December 2014.

Ms. Yellen pointed out that a majority of the members of the Committee envisaged a rate hike by the end of the year, as is visible in the publication of their projections.

- No party policy -

To justify the new status quo, the FOMC seeks to show that the us recovery still remains fragile and that a tightening monetary could slow it down: business investment –black point of the economy in recent months– remains “low” and inflation continues to evolve away from its target of 2% (+0.8% according to the index (PCE).

In its latest economic projections unveiled Wednesday, the Fed has again lowered its forecast for economic growth this year in the United States and has been also slightly more pessimistic on the job front as inflation.

The gross domestic product (GDP) in the u.s. is expected to grow by 1.8% year on year in the last quarter of 2016, 0.2 percentage point less than what was expected three months ago, according to these projections.

On the job front, the central bank has also proved to be less optimistic and now expects an unemployment rate of 4.8% this year, 0.1 percentage point more than expected in June. Inflation should climb to 1.3% this year instead of the 1.4% expected in June.

The economic weaknesses abroad continue to soar, according to the Fed, which ensures that it will continue to monitor “closely” the evolution of the international economic situation.

The u.s. economy is also under the threat of another mortgage: the presidential election of 8 November, the outcome of which remains uncertain.

the impartiality of the central bank has also been questioned by the republican candidate Donald Trump, who has accused Janet Yellen to play the game of the democrats by keeping rates low.

“I can say, categorically, that partisan politics plays no role in our decisions on the directions of monetary policy”, he said, Ms. Yellen during her press conference.

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