Washington (AFP)

We will have to wait to know when the American Central Bank (Fed) will start to reduce its asset purchases, and at what rate it will do so, its president Jerome Powell having simply mentioned Friday the possibility of launching the movement in 2021.

"Although the Delta variant presents a short-term risk, the outlook is good for further progress towards full employment," said the Fed chairman during his much-anticipated annual speech in Jackson Hole, Wyoming.

In other words, optimism is in order, but the institution prefers to observe the evolution of the economy before communicating a precise timetable.

The markets, which plunge or jump at the slightest hint on the subject, will therefore have to wait a little longer.

Jerome Powell recalled that at the last meeting of the Fed's Monetary Committee at the end of July, he was of the opinion, "like most of the participants, that if the economy continued to develop as expected, it might be appropriate to start to reduce the pace of asset purchases this year ".

All signals then appeared to be green.

But if since then employment has made further significant progress with the good figures for July, new risks have appeared with the progression of the Delta variant in the United States, he stressed: "we will carefully assess (economic) data and the evolution of risks ".

The Delta variant, in fact, which has resumed cases of Covid-19 contamination around the world, including in the United States, has already started to slow the recovery, adding new uncertainty.

- Rates will still wait -

The Fed is "waiting for additional data before committing," commented Ian Shepherdson, economist for Pantheon Macroeconomics, who is counting on an announcement at the Fed meeting in November, warning however that "it could easily be delayed if the post-Delta rebound takes longer than expected ”.

Since the start of the epidemic, the Fed has bought $ 120 billion worth of treasury bills and other securities each month to support the recovery.

It now intends to reduce this support which, by making credit more fluid and pushing rates down, has enabled the markets to rebound dramatically.

Grand Teton National Park, where Jackson Hole is located, October 4, 2012 KAREN BLEIER AFP

The next step will be to raise key rates, lowered to a range of 0 to 0.25% in March 2020. But this should not happen before 2023.

"The timing and pace of the next reduction in asset purchases will not be intended to send a direct signal as to when interest rates will be raised," Powell said.

"We have said that we will keep the rates (...) at their current level until the economy has reached conditions compatible with full employment, and inflation (...) is on the verge of falling. moderately exceed 2% for a while, "he detailed.

However, "we have a long way to go to reach full employment, and time will tell if we have reached 2% inflation on a sustainable basis."

- "Harmful" -

The Fed must guarantee full employment and price stability, and, on this last point, Jerome Powell once again put forward "transitory factors" to explain the high inflation of recent months.

He also warned of the risks of a premature monetary tightening of the screw.

"If a central bank tightens policy in response to factors that turn out to be temporary, the main effects are likely to occur when the need passes," which "unnecessarily slows down hiring and other economic activities and pushes the inflation lower than desired ".

"Today, with a labor market still struggling and the pandemic continuing, such a mistake could be particularly harmful," he warned.

Jerome Powell's speech was the only intervention at an unusually-format annual Jackson Hole symposium, fully virtual for the second year in a row, due to Covid, and very tight, over one day only.

The computer screen has therefore once again replaced the grandiose landscapes of the posh ski resort of Wyoming, for the traditional high mass of central bankers and economists.

The other central banks are absent, while round tables are planned between economists, including the chief economist of the International Monetary Fund (IMF), Gita Gopinath.

© 2021 AFP