the Fed wants to curb inflation, anticipates several new hikes of half a point (minutes)

US central bank (Fed) officials have said they are determined to bring inflation down sharply, and most of them estimated at their last meeting in early May that several further rate hikes of half a -dot will be “probably needed”.

Half-percentage-point hikes, faster than the usual quarter-point raises, will no doubt be appropriate in future meetings, according to the minutes of the early May meeting, released on Wednesday.

They consider it important to quickly bring monetary policy back to a neutral trajectory, that is to say one that neither stimulates nor slows down the economy. But the Fed could even adopt a tougher policy, which itself could weigh on the economy, if the outlook warrants it, it is indicated.

All the participants reaffirmed their strong commitment and their determination to take the necessary measures to restore price stability, further details this report.

Raising the key rates has the effect of increasing the cost of the credits that commercial banks grant to their private or professional customers, which aims to slow down demand, and therefore pressure on prices.

Officials from the mighty US Federal Reserve raised rates by half a percentage point at their May 3-4 meeting, and they are now in a range of 0.75 to 1.00 percent. .

The Monetary Committee, the Fed’s decision-making body for its monetary policy, wants to continue raising them to reach a so-called neutral level, between 2.00 and 3.00%.

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Another major step in the normalization of monetary policy, the Fed will begin to reduce its balance sheet on June 1, after having, during the Covid-19 pandemic, bought securities to flood the market with liquidity and allow it to continue to operate.

Inflation had reached its highest level in 40 years in March, 8.5% over one year, before a slight slowdown in April, 8.3%, according to the consumer price index (CPI).

The Fed favors another measure of inflation, the PCE index, whose data for April will be published on Friday, but which had also recorded, in March, its record since 1982, 6.6%.

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