The recent Donald Trump’s victory in the United States elections has not altered the plans of the Federal Reserve (Fed)at the moment already waiting to know the guidelines that the new North American president will apply. The institution has applied a cut of a quarter point to leave rates in a range of 4.5-4.75%.
The analysts, despite the electoral result, did not contemplate any surprises in this meeting. And the Fed has lived up to expectations. Inflation data for September, with a CPI of 2.4%invite us to think about better price control in the country, despite some surprises. All in all, the data is somewhat higher than what experts expected for that month.
The fact that the battle against inflation is not yet over has helped the Federal Reserve moderate the pace, compared to the decline undertaken in September, when it cut rates by half a point at a time. And analysts, now that Trump has won, even point out that the Fed could further moderate the pace of rate cuts in the future.
The question, in this case, lies in what policies the new American president will adopt, especially with regard to the economy. Analysts highlight that it could prepare fiscal stimulus packages for the country’s economy, which could put at risk the ground gained on inflation in recent times; Hence, they predict that the Fed could opt for a slowdown in rate cuts.
“In support of its goals, the committee decided to reduce the target range for the federal funds rate by 1/4 percentage point to 4-1/2 to 4-3/4 percent. In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully evaluate incoming data, the evolution of the outlook and the balance of risks,” the Fed said in the statement, later reconfirming its objective: “The “The committee is firmly committed to supporting maximum employment and returning inflation to its 2% target.”
Thus, the Federal Reserve delves into its traditional message, just as the European Central Bank (ECB)of caution in assessing the situation in the face of future cuts: «In assessing the appropriate stance of monetary policy, the Committee will closely monitor the implications of the information it receives for the economic outlook. The committee would be willing to adjust the monetary policy stance as appropriate if risks arise that could impede the achievement of the committee’s objectives.».
The Fed highlights, however, that in the current scenario “recent indicators suggest that economic activity has continued to expand at a solid pace. Since the beginning of the year, labor market conditions have generally relaxed and the unemployment rate has increased, but remains low.
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