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The US Federal Reserve (Fedfor its acronym in English) will have to be more restrictive going forward and adjust the cuts it makes to 25 basis points. bowlproject Alejandro Saldanadirector of financial analysis at Bx+.
“This is as long as there are no surprises in the inflation and employment does not exhibit a dramatic cooling in the final stretch of the year.”
He estimated that inflation will not return to its target before 2026, so the Fed will have to maintain a somewhat restrictive monetary policy for a while and go recalibrando carefully the pace at which it adjusts interest rates.
In it case of Mexico, The financial analyst commented that inflation remains high – despite the partial correction in August – and faces a difficult outlook.
“However, the majority of the Governing Board (in Banxico) has shown tolerance to inflationary risk and financial volatility. In addition, today’s (yesterday’s) decision by the Fed may give some room for maneuver for the Mexican central bank to cut the target rate again.”
Meanwhile, Quasar Elizundia, financial house analyst Pepperstone, The Fed said it had “aggressively” started its monetary normalization cycle with a 50 basis point rate cut at its September meeting, marking the first reduction since 2020.
“This adjustment comes after the cost of money reached its highest level since 2001, which represents a significant change in its policy”.
He added that the decision of the Federal Open Market Committee (FOMC) was in line with market expectations, which had anticipated a “jumbo cut” at the start of the cycle, rather than a more gradual approach.
He pointed out that among the key points, the new economic projections of the Fed stand out, which now anticipate higher unemployment for the Closing date 2024with a rate of 4.4%, in contrast to the 4% projected in June.
“This adjustment reflects a reassessment of the economic environment by the central bank. In addition, the updated dot map suggests that two additional rate cuts could occur in the remainder of 2024, which is in line with market expectations of reductions close to 10 percent. 100 basis points for the year”.
With an electoral tone
The Federal Reserve cut its benchmark interest rates for the first time since 2020, opting for a sharp half-percentage point reduction to 4.75-5.00%, just weeks before the presidential election in USA.
The bank’s decision makes credit cheaper for individuals and companies, good news for the government of Joe Biden and for Vice President Kamala Harris, the Democratic presidential candidate.
In addition, the Fed announced that it plans to end the year with an additional half-percentage point cut, according to a statement in which it expressed “greater confidence that inflation is moving in a positive direction.” sustainable towards (its goal of) 2%.”
The decision was not unanimous at this last meeting before the November 5 elections. The governor Michelle Bowman voted for a smaller cut of 25 basis points. The Fed revised down its inflation forecast to 2.3% by the end of this year and to 2.1% by 2025.
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2024-09-24 07:05:22