We will no longer see the price of money at very low levels like before the pandemic. Words from Jerome Powell, president of the United States Federal Reserve, who participated in a conference on monetary policy on Friday.
The Federal Reserve continues to "take into account the economic data" before considering a rate cut, which will necessarily occur," added the president of the US central bank. “I do not believe that rates will return to the historically low level that they had before of the pandemic,” he specified.
"It's difficult to determine where they should be. We don't know where rates will be once all this is behind us," he continued, "but they will still be higher" than their current levels. "It's still a while away and we have to get used to it."
Just before Covid, the price of money in the United States was 1.5%. Since the 2008 financial crisis and before the current restrictive cycle, it has never exceeded 2.25% and even reached 0%. Currently they are at 5.25%.
To know how rates will evolve, we will have to wait for the behavior of inflation. Well, the PCE index, the one closely watched by the Fed, rose slightly year-on-year in the United States in February, up to 2.5%, as reported by the Department of Commerce on Friday. The increase in energy prices was the main cause of this rebound. The central bank aims to bring inflation back to 2% in 2026. "Inflation is clearly in the direction we want to see," Jerome Powell said at a conference in California.
The head of monetary policy, in this sense, has cooled the spirits of investors who have been betting on cuts in recent months: "we are in no hurry," has been his message.
