However, For the May meeting, the market sees a slightly greater probability of a cut instead of remaining unchanged. By the end of the year, there are 46.8 basic flexibility points discounted in the price and there is not much beyond that, which places the terminal rate in the range of 3.75-4.00%. In December, Fed officials indicated that they could reduce their rate only twice this year. Goldman Sachs economists believe that these cuts will not occur until June and December.
«Recent indicators suggest that Economic activity has continued to grow at a good ritmeither. The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid. Inflation remains something high although the Committee aims to achieve the highest level of employment and an inflation rate of 2% in the long term. The Committee considers that the risks to achieve its employment and inflation objectives are approximately balanced, ”says the press release that speaks of» uncertain economic perspectives «while remains attentive to the risks for both aspects.
Powell has said that It is more difficult to measure where inflation is directedpartly due to the greatest uncertainty about the policies that Trump will adopt and the speed with which they will affect the economy. Trump has promised generalized tariffs, tax cuts and mass deportation of immigrants, all of which could make prices upload. In general, the Fed maintains high interest rates to slow down indebtedness and spending and cool inflation.
«High uncertainty» before the change of government in the United States
The president of the FED has warned that «in the current situation there is probably a high uncertainty» due to the change of government, but «this will happen, and in a time we will return to the normal levels of uncertainty.» Until then, he says, «The forecasts are complicated for all»so the Fed has preferred to pause and wait before making more decisions. Fed officials are «hoping to see what policies are promulgated» with the new president.
He added that «we are going to be carefully observing» what is launched and that the Fed «will not be in a hurry to reach a policy of understanding what our monetary policy response should be.» In addition, Powell has assured that «With the significantly restrictive monetary policy situation, we are not in a hurry to reduce the types,» And he recalled that they are not following any «predetermined path.» «If the economy is still strong and inflation does not move towards the objective, we can maintain restrictive monetary policy,» he said.
It is not clear if Trump will respond to the Fed decision to stay out. Last week in Davos, Switzerland, Trump said he would reduce energy prices and then «demand» that Fed reduced indebted costs. Asked by journalists, if I expected the Fed to listen to it, Powell has said a resound Have no contact with Trump.
The committee has announced that It will continue to reduce its treasure and debt securities holdings of agencies and values supported by mortgages. “The committee is firmly committed to supporting the maximum employment and the return of inflation to its 2% objective while preparing to adjust the orientation of monetary policy as appropriate if risks that may prevent the achievement of the objective of the objective of the objective of the objective of 2%. Keep the guys at this meeting, experts say, sí will give more time to Fed officials to evaluate inflation reduction and the impact of a series of new policies by President Donald Trump on tariffs, taxes, immigration and regulation.
Before the meeting, the main indices were falling between 0.18% of Dow Jones and 0.85% of Nasdaq 100. As the Fed decision has been known, the bags are still negative. The Dow Jones is left 0.44%, over 44,688 points, the S&P 500 It falls 0.6%, to 6.0.27 integers and Nasdaq 100 corrects 0.9%, to 19,548 points.
In fixed income, always very sensitive to any change in monetary policy, Hoand the profitability of the US bonus at ten years to be at 4,579%. Profitables, which move in reverse prices, went abruptly earlier for the week to the search for safer assets by investors.
«Politics and economy are well positioned. We are in a very good place»
The statement after the meeting left some clues about the reasoning behind the decision to keep the stable rates. He offered a somewhat more optimistic vision of the labor market, while lost a key reference of the December declaration that inflation «has progressed to» the inflation objective of 2% of the Fed. A stronger labor market and persistent inflation would provide less incentives for the FED to make the policy more flexible. The statement again indicated that the economy «has continued to expand at a solid rhythm.» «At the moment, We feel that we are in a very good place«Powell says,» politics is well positioned and the economy is in a pretty good place. «
During a press conference, President Jerome Powell added that the labor market has not been a significant source of inflationary pressure. He said the Central Bank would need to see «real progress in inflation or some weakness in the labor market before we consider making adjustments.» The recent statements of those responsible for monetary policy have shown some apprehension about whether progress in inflation reduction has stagnated. Officials have also said that they want to see how the previous cuts are making their way to the economy, although most expect rates reductions this year.
«Inflation has fallen abruptly since the maximum of 40 years it reached in mid -2022, but The 2% objective of the Fed is still difficult to achieve. In fact, the Central Bank’s favorite price indicator showed that general inflation rose to 2.4% in Novemberthe highest since July, while the underlying measure, which excludes food and energy, remained at 2.8%, Powell said.
Before Powell’s statements the market expected an assessment on macro evolution because Recent economic data in the United States reveal a significant deceleration of the requests for lasting goods, which decreased 2.2% in December, despite the expectations of a 0.8% rebound. While this fall may seem worrying, the tight reading excluding the automotive sector showed a slight growth of 0.3%, indicating that the deceleration is not as serious as the main figure suggests. Besides, American labor costs are significantly higher than those in competitorsso the main impact of these policies could be to boost internal inflation and weaken the purchasing power of consumers, which could harm the long -term general economic growth.
The meeting also had a change in the composition of the FOMC voting. Powell and the other seven members of the Board of Governors are joined this year as voters the regional presidents Austan Goolsbee of Chicago, Alberto Musalem of St. Louis, Susan Collins of Boston and Jeffrey Schmid of Kansas City. The vote to maintain the rate of funds without changes was unanimous.