February 1, 2024
(press release)
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The US Federal Reserve has decided to keep interest rates unchanged in its last meeting, as they did in the three previous ones. This Wednesday it left them in the range of between 5.25% and 5.5% , where they have been since July 2023. With that decision, which was anticipated, the focus returns again, and if possible with more intensity than before, to when the U.S. central bank can start lowering them . Those calculations began to ramp up after the Fed's previous meeting in December, when most members of the committee responsible for monetary policy at the U.S. central bank anticipated three cuts this year.And the language in Wednesday's statement announcing its rate decision has cooled somewhat the expectations of those who expected those cuts to begin in March. "The Committee does not expect it to be appropriate to cut rates until it is more confident that inflation is moving sustainably toward 2%," reads the document, from which, yes, references that had left the door open to further hikes have disappeared. As this time the communiqué of the body is not accompanied by economic forecasts, the decision increases the attention to the press conference that Jerome Powell, the Fed chairman, will hold at 2.30 p.m. in Washington (8.30 p.m. in mainland Spain). Success and risks in the fight against inflation It was a strategy not without risks but one that seems to be paying off.US inflation is falling at a faster pace than anticipated, and for the first time since 2021 it has fallen below 3%. There are also beginning to be glimmers of light in indicators of consumer sentiment. At the same time, the economy has continued to grow, by 3.1% year-on-year in the last quarter of last year, although this raises fears that companies will raise prices again. Although the long-awaited "soft landing" to avoid a recession seems within reach, the Fed continues to move with leaden feet . So for the time being it has been leaving the door expressly open to further hikes if things go wrong. And now, even when it doesn't look like they will, a portion of monetary policymakers don't want to rush either. "We can take time to make sure we get this right," Christopher Waller, one of the members of the Fed's board of governors, was saying recently. There were analysts who see possibilities that the first cut in the last two years would come after the meeting that ends on March 20, although doubts were growing and more and more are beginning to bet on a cut in May, a bet that will double after Wednesday's statement, and unless Powell is more forceful in his statements to the press. There are also experts who do not believe that the Federal Reserve has incentives to give clues now about what it will do and when, having six weeks to continue to see how the economy continues to evolve.
It has been six months since the US central bank put the brakes on its aggressive policy of rate hikes, the fastest in 40 years, which began almost two years ago to combat runaway inflation, which was also the fastest in four decades. With those 11 hikes since March 2022, it brought the price of money to its highest level in 23 years.
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