Fears around an inflationary spiral had been mounting for several weeks within the US Federal Reserve. It is the turn of Jerome Powell, the boss of the Fed, to speak out for a new awareness by affirming that theincreased prices – highest in 31 years in the United States – was not, as some have argued, temporary. Word “transient“is no longer the most precise term to describe the high level of inflation, he said on Tuesday. In October, inflation across the Atlantic reached + 6.2%.
After hammering for months that the rise in prices should not last and that it was due to transitory factors linked to the recovery, Jerome Powell told the Senate Banking Committee that “the time has probably come to stop using that word“, and “the risks of more persistent inflation have increased “.
Words that will still contrast with the position of his European counterpart. So far, Christine Lagarde, head of the European Central Bank, continues to talk about “temporary factors“to the phenomenon.
Towards the end of the buyback program?
Also, to avoid overheating, the US Federal Reserve announced in early November to reduce its asset buyback program, to the tune of $ 15 billion per month, an amount adjustable according to the evolution of the economic situation. And a first step before raising its rates for the moment maintained. The rate hike is expected for 2023, according to economists.
La Fed should accelerate from January the reduction of its asset purchases, which would thus decrease by 30 billion dollars per month, ie double the current rate, and it could thus put an end to this process of “tapering” by mid -Mars, say the strategists of Goldman Sachs for their part.
Goldman Sachs expects the Fed does not start raising its key rates until next June. The American investment bank, like several competitors, is now counting on three rate hikes in 2022 and no longer on two.
(With Agencies)
