Washington (AFP)

The Federal Reserve will unveil its new forecasts for the American economy on Wednesday, the first since the start of the pandemic that precipitated the country in one of its worst crises, and reaffirm that it will keep its rates close to zero for long time.

"How do participants see short-term rates? Close to zero but not negative in the near future," said economist Diane Swonk of Grant Thornton.

The American economy has been showing signs of a thrill for several weeks, while the country's shops and restaurants are gradually reopening.

The unemployment rate fell in May, falling to 13.3% when analysts saw it climb to almost 20%, a level worthy of the Great Depression of the 1930s.

At the end of two days of meeting of the Monetary Committee, the president of the Fed, Jerome Powell, "will greet the rebound in May, but remain cautious", anticipates Diane Swonk, in a Tweet.

She thinks it will also, as it has done many times, call on the Trump administration and Congress to increase budget support for the economy: the Fed "can lend, not spend. It's a big stake ", she comments.

- Rate at zero -

The American Central Bank has put in place since the start of the crisis, which has killed more than 112,000 people in the country, a whole range of measures, some of which are unprecedented, to allow the economy to resist.

In particular, as of March, it lowered its rates to zero, to make credit cheaper and thus stimulate consumption and investment.

Its forecasts are eagerly awaited, but could be rather vague, notes Kathy Bostjancic, analyst for Oxford Economics. She expects it will simply point to a strong rebound in growth in the second half, after bottoming out in the second quarter.

The vast majority of markets expect rates to remain at zero, but 15% of players expect an increase in a range of 25-50%, against less than 10% at the end of last week, according to the evaluation CME Group futures products.

GDP fell 4.8% in the first quarter, after more than ten years of growth, and could fall by 20 or 30% in the second.

- Deflation risks -

And to keep rates low for several years, the Fed could also engage in controlling the yield curve, or capping interest rates, which allows, via the purchase of long-term bonds , to maintain low rates in the longer term.

"The risks of deflation should prompt the Fed to commit to controlling the yield curve by the end of the year," said Diane Swonk.

One of the elements that central banks take into account when defining their monetary policy is indeed inflation. Consumer prices have been falling since March in the United States.

The United States entered a recession in February after 128 months of expansion, according to the authoritative National Bureau of Economic Research, and even revised its definition due to the brutality of the shock caused by the pandemic of coronavirus.

The protests that have rocked the United States since the May 25 death of George Floyd, a black man asphyxiated by a white police officer, should also be brought up by the Fed's monetary committee.

They have highlighted the inequalities that affect African-Americans, and Donald Trump is criticized from all sides for his management of this crisis.

© 2020 AFP