Federal Reserve set to hold meeting under pressure

Posted Jan 25, 2022, 7:05 AMUpdated on Jan 25, 2022 at 7:06 am

Between the devil and the deep sea. For his first monetary policy meeting of the year, Jerome Powell, the chairman of the Federal Reserve, could have dreamed of a calmer context. The American Central Bank will be eagerly awaited on the announcements of an increase in its key rates next March, in an attempt to counter galloping inflation. But at the same time, the tensions in Ukraine triggered a real debacle on the equity markets.

The Fed had, however, marked the field well. It has been preparing people’s minds for a first turn of the screw for several weeks. Faced with inflation that is much more durable than what it anticipated two months ago, it is difficult to maintain an accommodating policy. It has therefore gradually hardened its tone by accelerating the extinction of its asset purchase program, the monthly rate of which has already increased from 60 billion to 30 billion dollars and which will end at the end of March.

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