Washington (AFP)

The US Federal Reserve's (Fed) monetary meeting this week is raising a lot of expectations, but it is not yet this time that the timing of the slowdown in asset purchases should be announced, economists anticipate.

"Despite a marked slowdown in economic activity (...), the Fed will continue to prepare for the reduction (of asset purchases) at its meeting," said Kathy Bostjancic, economist for Oxford Economics.

The analyst expects, however, that "policymakers will officially announce phase-down plans at the November meeting and start the decrease in December or January," she said in a note.

Between an economic recovery thwarted by the Delta variant, in fact, and very disappointing job creations in August, the situation is far from improving as quickly as expected.

And members of the Fed's Monetary Committee will no doubt want to give themselves a few extra weeks before reducing the cash injections, which had supported the economy during the crisis linked to the pandemic.

Even though inflation, it remains high, despite the first signs of slowing down.

A press release will be issued at 2:00 p.m. (6:00 p.m. GMT) at the end of the meeting on Wednesday, followed by a press conference by Fed Chairman Jerome Powell at 2:30 p.m. (6.30 p.m. GMT).

- "At least one signal" -

Regardless, the movement is underway to reduce purchases of treasury bills and other securities, currently $ 120 billion per month, and it is only a matter of months.

Fed President Jerome Powell on July 15, 2021, during a Senate hearing in Washington Nicholas Kamm AFP / Archives

"The monetary tightening train has already left the station at the last meeting," at the end of July, Roberto Perli, head of international policy for Cornerstone Macro, told AFP.

"We should have at least a signal that we are approaching the start of the tightening," he stressed.

While asset purchases are expected to gradually begin to be reduced soon, key rates should remain in the exceptionally low range of 0% to 0.25% for a while, where they were lowered in March 2020.

Jerome Powell "will seek once again to dissociate the moment of the decrease from that of the take-off of rates", anticipates Kathy Bostjancic.

But the "scatter plot", which shows when each member of the Monetary Committee thinks it will be wise to start raising these interest rates, will be updated.

In the latest estimates, made at the June meeting, the majority of Fed officials expected a first rate hike in 2023.

Its European counterpart, the ECB, will take stock of its monetary policy in December.

It has just announced a "moderate" slowdown in the volume of public and private debt buybacks on the market in the coming months, but has kept its main interest rate at zero, and keeps the negative rate of 0.50%. on deposits that commercial banks entrust to it instead of lending them to their customers.

- Powell renewed or replaced?

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Members of the Federal Reserve's Monetary Committee will also update their economic forecasts, in terms of growth, employment and inflation.

Donald Trump then president, at the White House on November 2, 2017, with Jerome Powell whom he appointed as head of the American central bank NICHOLAS KAMM AFP / Archives

"I mainly expect a status quo declaration with a downward revision of forecasts due to slower growth and a slight improvement in forecasts for employment," the AFP told AFP. economist Joseph Brusuelas, from RSM.

Jerome Powell is still waiting to know what will happen to US President Joe Biden.

Will he choose to give him a second four-year term at the head of the Fed?

Or will he prefer to replace him, in all likelihood by the only Democratic governor of the monetary institution, Lael Brainard?

His term expires in early February, so the decision should be announced in the coming weeks.

Traditionally, the chairman of the Federal Reserve is reappointed for a second four-year term.

But Republican President Donald Trump broke with this tradition by appointing Jerome Powell in place of Janet Yellen.

© 2021 AFP