(Washington) The Fed unsurprisingly maintained its rates at their level on Wednesday during its meeting, and plans to lower them only once in 2024, in the face of the rebound in inflation at the start of the year, and despite recent higher figures. encouraging.

The US central bank (Fed) left its main policy rate in the 5.25% to 5.50% range it has been in since last July, its highest level in more than 20 years.

Fed Chair Jerome Powell will provide details during his press conference at 2:30 p.m. (2:30 p.m. Eastern Time).

Highlighting the meeting, Federal Reserve officials said they expect to cut rates on average just once this year, falling to 5.1% at the end of 2024. Of the 19 members of the Monetary Policy Committee (FOMC), four anticipate no decline, seven see one, and eight expect two.

In mid-March, when the Fed last updated, officials anticipated three cuts.

But since then, a rebound in inflation has prompted them to be cautious, to avoid a new surge in prices. The month of April, however, saw a slight improvement.

And in May, inflation slowed to 3.3% year-on-year compared to 3.4% in April, and even an absence of price increases over one month, according to the CPI inflation index, on which are indexed pensions, and which was published Wednesday morning, just before the resumption of debates at the Fed.

The FOMC thus, in its press release, reported “modest additional progress” towards its 2% inflation objective.  

Fed officials, however, revised their inflation forecasts upward for 2024 and 2025, to 2.6% and 2.3%, when they had forecast 2.4% and 2.2% in March, during previous forecasts.

The PCE index, the measure favored by the Fed, remained stable in April at 2.7% year-over-year. The May figures will be published at the end of June.

Fed officials “need to see more than a month of slowing, showing a sustainable path toward (its target of) 2%, before cutting rates this year,” warned Rubeela Farooqi, chief economist for High Frequency Economics.

The Fed, on the other hand, confirmed its forecasts for gross domestic product (GDP) growth: 2.1% in 2024 and 2.0% in 2025.

As for the unemployment rate, the forecast remains the same for this year, at 4.0%, but is revised a bit for 2025, to 4.2% from 4.1%.

By maintaining its rates at this level, the Fed marks its difference with its European counterpart, the ECB which, on June 6, lowered its key rates for the first time since 2019.

And this worries the Democratic Party of President Joe Biden, less than five months before the presidential election which will pit him against Republican Donald Trump.

Two elected Democrats in Congress sent a letter to Fed President Jerome Powell on Monday, warning him that “an excessively restrictive monetary policy could endanger the vigorous job market” in the United States.

“By lowering rates now, we ensure that we do not cause unnecessary and harmful economic damage,” write Senator Sheldon Whitehouse and Representative Brendan Boyle in their letter.

The Fed is independent of political power, but its decisions have significant consequences on the American economy.