The Fed left its rates unchanged on Wednesday after its first monetary meeting of the year, despite the pressure of Donald Trump for a further cut, and the uncertainty that the new coronavirus weighs on the outlook for the global economy.
The key rate therefore remains within a range between 1.5 and 1.75%.
The decision was unanimous among members of the Fed's monetary committee, which believes that this monetary policy should notably allow inflation to return to its target rate of 2%, when it is currently lower.
Annual inflation in the United States was 1.5% in November, according to the PCE index, the most followed by the Fed to measure price developments.
The press release noted, however, that household consumption, the main driver of the US economy, was increasing at a "moderate" rather than "solid" pace as in the December press release.
The Central Bank unsurprisingly confirms its break started in December, after cutting rates three times in a row.
President Jerome Powell wanted to see inflation "persist" before raising rates.
For two days, the members of the Monetary Committee examined the economic situation in the United States, where most of the indicators are green: employment, services, consumer confidence ...
Only the manufacturing sector is in recession, victim of the trade war with China. On this front however, the truce following the agreement signed on January 15 by the two economic powers brings a wind of optimism on the markets.
But while the International Monetary Fund (IMF) predicted a resumption of global growth this year, the global outlook is now clouded by the epidemic of the new coronavirus, which has killed more than 130 people in China.
"The coronavirus introduces a new form of uncertainty. (...) Disruptions in the global supply chain can be significant," Diane Swonk, chief economist for Grant Thornton, told AFP.
"It is still too much to act but the Fed must show that it is watching this closely," she added.
For economist Joel Naroff, the coronavirus will influence the Fed's decisions "if it affects markets lastingly and if there are clear signs of a slowdown in the economy".
- "It's time" -
The Fed has also watched closely the deficit forecast of the US federal state, which will widen by $ 160 billion more than expected over the period 2020-2029 to reach a total of $ 12.367 billion, according to services. of the Congress budget (CBO).
As for President Donald Trump, he put pressure on the Fed, as is customary, to demand ever deeper rate cuts.
In a tweet published Tuesday morning shortly after the opening of the monetary meeting, he said that "the Fed should be clever in lowering rates to improve our competitiveness compared to other countries that pay much less" .
"We would then focus on paying down and refinancing the American debt," said the president, ensuring that "now is the time" because "there is almost no inflation".
Last Wednesday, from the economic forum in Davos (Switzerland), he accused the institution of having slowed growth. "A lot of bad things have happened, starting with the Fed, which has not been good," he said.
At the last monetary committee meeting in December, the Central Bank said it still expected economic growth to be "modest".
It then left unchanged its expansion forecast for 2020 at 2%, after 2.2% in 2019.
© 2020 AFP