The Federal Reserve has published the minutes of the last meeting, held at the end of January, in which they decided to maintain interest rates at the current level, between 4.25% and 4.50%. According to the monetary authority, among the factors that can undermine the disinflation process are “changes in trade and immigration policies”, as well as an increase in consumption, something that makes it clear that The members of the Federal Open Market Committee are pending to have more clarity on the impact of Trump administration policies, before continuing with the process of decreases in interest rates.
Fed members have recognized that inflation risks “are up to all”, thus recognizing that There may be new inflationary pressures in the next Meses. “The participants in the meeting cited the possible effects of the changes in the immigration policy, the geopolitical developments that can affect the supply chains, or an increase in consumption by homes”, as arguments in favor of maintaining the caution with the types.
They point out that companies could try to transfer consumers the increase in costs linked to the “potential” tariffs of the Trump administration, which can also have an obvious inflationary impact on the United States economy.
On the other hand, Fed members detected that inflation forecasts have recently increased, although they emphasized that long -term estimates remained well adjusted. In this sense, the text published by the Central Bank indicates that the inflationary rebound recorded at the beginning of this year was difficult to identify due to complications when eliminating the seasonal effects of economic activity.
However, some members of the monetary authority perceived optimism among companies due, in part, to an expectation of tax relaxation by Washington. Even yes, The uncertainty for Trump’s tariff policies remains, since the Fed detected an increase in concern in relation to “potential changes in federal policies.”
Thus, the publication of the minutes of the Fed occurs one day after Mary Daly, a member of the monetary authority, ensures that the policy must be restrictive until inflation does not experience a progressive decrease. Specifically, Daly, said in a speech pronounced in Phoenix that “at this time, politics has to remain restrictive” until verifying that progress is being made in the fight against inflation. His message has been totally in line with what the minutes of the Fed Meeting have finally revealed.
The publication of the Fed Proceedings has been received by Wall Street with moderate climbs. The Dow Jones, who lost 0.40%, is listed flat, struggling to obtain the green, staying at 44,562 units. For its part, the S&P 500 adds 0.21% and significant firm in 6,143 integers. Likewise, the Nasdaq 100, which advanced briefly, now wins 0.15%, advancing to 22,200 points.
Beware of debt roof
Fed members are already suggesting their concern for an issue that in the coming months can re -monoplate headlines in economic media: the scope of the debt roof in the United States, which in the past has generated several government closures. In his opinion, it is important to monitor how this situation develops, due to the impact that the Fed balance reduction process can have on this front.
“On the potential of significant changes in the reserves in the coming months due to the dynamics of the debt roof, several members showed that it may be appropriate to stop, or pause, the balance reduction, until this event is solved,” he explains.
Do not forget that The reduction of the balance by the Fed has effects similar to those of a type riseand presses the profitability of the bonds that are removed from the balance. A good part of them is sovereign debt, so Fed sales can contribute to increasing the profitability of the bonds, and this could be added to the pressures that the fixed income market would probably suffer in case the debt roof in the coming months.
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