Inflation and delta variant advocate a prudent Fed

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Between the rise in prices and the threats posed by the delta variant, the central bank of the United States (Fed) should issue a message of caution this Wednesday and, perhaps, give some indications about the reduction of its support for the economy.

The meeting, which began on Tuesday morning, will end at noon on Wednesday, followed by the issuance of a press release at 2:00 p.m. local time (6:00 p.m. GMT) and a press conference by its chairman, Jerome Powell, at 2:30 p.m. ( 18H30 GMT).

The Federal Reserve should maintain its guideline rate in the range of 0 to 0.25%, which it has been in since March 2020. Members of the Monetary Committee do not anticipate any increase until 2023.

Asset purchases, which have kept markets going despite the crisis, are also expected to remain at their current level of $ 120 billion a month.

But the Fed has said it will announce a schedule of reducing its monetary support. Some analysts expect such an announcement by the end of August, at the conference of the world’s central banks in Jackson Hole, Wyoming, or by the end of September, at the next Fed meeting.

– Risks –

The US central bank should also welcome “the improvement in the economy seen since (its) last meeting in mid-June,” said Diane Swonk, an economist at Grant Thornton.

However, sadly, Jerome Powell “will have to recognize the risks that are beginning to emerge from the spread of the delta variant,” he added.

“The question is how this resurgence will affect the return to work and if it will curb some of the demand for services.”

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