270 billion since the beginning of the crisis

The Federal Reserve (Fed) believes in the standardization of the credit, but not to the return of inflation. On the eve of the presentation, tomorrow, in its semi-annual report to Congress on the economy, the Fed Chairman, Ben Bernanke, has begun to concretely implement its strategy of "exit of crisis" that he had already drafted on February 10. No change to its zero rate policy adopted in December, 2008 (at the level of the rate of "Fed funds"), but the Central Bank opted last Thursday for an increase of a quarter of a point, 0.5-0.75, the rate at which commercial banks can finance directly to her (read also page 32). Largely symbolic, this decision justified by "the continuous improvement of the conditions in financial markets" aims to give the first signal of a return to normal"in the credit market.

"Today, we have a report on inflation which showed the absence of inflationary pressures." "This is why we must still focus on growth and employment", said Friday the New York Fed President William Dudley, one of the twelve voting members of the monetary policy Committee. Clearly, there will be no increase in rates (between 0 and 0.25 today) until the return to employment is not found. The consensus of economists is not monetary tightening before the fourth quarter of 2010, even considering the next year. In view of the last forecast of the Fed to an unemployment rate between 9.5 and 9.7 at the end of the year, the Fund Manager Bill Gross (Pimco) does not increase rates before 2011.

Overstated risks

Well that without great impact on the cost of financing banks who have a limited recourse to the Bank of discount of the Fed, the rehabilitation of the discount rate, effective Friday, is no less a first not to the "standardization" of the quantitative policy of the Central Bank which has more than doubled the size of its balance sheet (at 2.270 billion) since the beginning of the crisis. It is the fall of Bear Stearns in March 2008 that the Fed had reduced to a quarter of a point the difference between the discount rate and the rate of "Fed funds".

The announcement of the first concrete signal of "standardization" of the policy of the Fed coincided Friday with the publication of the index of inflation for January. While consumer prices increased by 0.2 in January (against a forecast of 0.3), due to energy prices, the total inflation rate fell marginally from 2.7 to 2.6. However, underlying price (excluding energy and food) index shows a decline of 0.1 from the previous month, for the first time since 1982. "This shows that fears about inflation risks generated by the increase in the balance sheet of the EDF are overstated." "It cannot be inflation until unemployment does not fall," said Evariste Lefeuvre, Chief Economist of Natixis in New York.

"It is still too early for sand champagne", qualified the President of the New York Fed, William Dudley, at a Conference in Puerto Rico, by inviting the markets not to overvalue the "small technical signal" of the increase in the discount rate. After the unexpected decline in unemployment (from 10 to 9.7) in January, the first signal of standardization however helped the dollar regain Friday its highest level for eight months against the euro.