The Fed intends to cut interest rates only once this year in the face of "modest" progress on inflation.
The rise in consumer prices has in fact slowed but the 2% target remains distant, so much so that the central bank has revised upwards its estimate for inflation this year to 2.6% from the previous 2.4%. Wall Street slows but remains on the rise after the Fed's announcement, which certified what has emerged in recent weeks, namely the possibility of a reduction of a quarter of a point in the cost of money this year. Swaps indicate that the cut could come at the meeting on November 6 and 7, therefore after the American elections.
"Inflation has slowed substantially but remains too high," Fed Chairman Jerome Powell said at the end of the two-day meeting, during which the central bank decided to leave rates unchanged in a range between 5.25% and 5.50%, the level at which they have been since July 2023. In May, consumer prices rose by 3.3%, less than the 3.4% in April and below analysts' expectations. American growth remains solid, with immigration continuing to be a factor in the increase in the labor force. GDP is expected to grow by 2.1% this year with an unemployment rate of 4%, according to Fed estimates that confirm previous forecasts. "If the labor market weakens, the Fed stands ready to intervene," Powell added, noting that the expectation of a single cut "is not a plan" and can be revised. The Fed chairman then reiterated that restoring price stability is essential for the functioning of the economy and that the central bank is committed to bringing inflation back to 2%.
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