According to Fedwatch that measures cme groupin the market they bet 94.7% that the US Central Bank cut the 25 basic points, to the range of 400-425 points. Meanwhile, for the October meeting, 83.6% expect a new reduction of 25 points, as in December, where expectations are around 78%.
However, the decision made by the Federal Open Market Committee (FOMC) The incoming week will not be exempt from difficulties. As explained by the Mediterranean Foundation economist, Maximiliano Gutiérrez, in a recent report, “The Fed was cornered between defending price stability or full employment“
The dual mandate of the Federal Reserve It urges you to maintain inflation below 2% per year, while the unemployment level should not exceed 4.5%. “While inflation suggests a more restrictive monetary policy, labor deterioration demands stimulus to avoid deepening the deceleration,” he explained.
Prices are heated
Although the Retail price index (CPI) That it was known on Thursday coincided with market estimates, that also meant that inflation remains up. It was 2.9% per year and 0.4% monthly, the highest data since January of this year.
According to Senior Research Strategy of Pepperstone, Michael Brown, If the monthly results of the last quarter are annualized, it is “possible to” obtain a clearer image of the underlying inflationary trends in the US economy. ” In this regard, he estimated that The average inflation in that period of time was 3.5%, against the previous 2.3%.
“In addition, since, in the current macroeconomic context, Most of the updating risk comes from Trump administration tariff policiesthe composition of pressures on prices requires even more attention than usual, especially since the degree of transmission of tariffs remains uncertain, “he added.
Employment cools
Despite this scenario in the inflationary front, in the labor market the situation generated greater concern. Consulted by Scopethe economist of Eco go, Rocío Bisanghe explained that in August “the unemployment rate reached the 4.3%and Submployment experiences strong growth, from 7.9% to 8.1%“
In addition, he stressed that “The creation of jobs was much lower than expected (In fact, the vacancies and unemployment relationship fell below 1) “. To that it was added that” the review of the last two months shows that 13,000 jobs were lost. “
In his conference in Jackson Hole, the head of the Fed, Jerome Powellhe had affirmed that A “curious balance” is being given in the US labor market as a result of the deceleration of both the supply and the demand for workers.
“Factors such as the immigration policy of the Trump administration (more restrictive than that of its predecessor) and population aging reduce the offer, while companies are cautious when hiring,” Gutierrez explained.
If the rates lower, what about inflation?
For Bisangit is subject to debate if inflation will continue to increase after a possible cut in interest rates. On the one hand, he argued that “stocks prior to the imposition of tariffs begin to run out and that could boost a new wave of increases.”
However, he also argued that “the impact that this would finally have is difficult to quantify”, because “The products that are exposed to the rates represent 19% of the basket”added to the bilateral agreements signed by the United States during the last months and “judicial failures (now in an instance of appeal) that aim to unsubscribe many of the tariffs that were imposed“
He added: “While the inflation data was high and in another context there would be a thousand alarms, I think that the bad employment data of last week and the risk of a possible stagflation weigh more for the Fed“
For his part, the Chief of Strategy at Financial Allies, Martín Polohe said in dialogue with Scope That “inflation is not going to shoot, but it will continue closer to 3% than 2%, because the Fed already made the adjustment and there was a monetary squeeze.”
“Given the cooling of the labor market, Fed prefers to run the risk of inflation a little higher on the target (incidentally it helps to liquef That Trump generates more instability“He deepened.
The impact in Argentina and the region
Gutierrez considered that the loss of rates in the United States “It is good news for Argentina in particular, and for emerging ones in generalbecause by reducing relative yield in dollars, it leads to capital flows to go to emerging. “
Anyway, he added that in the Argentine case, “given the country’s situation and the lack, at least for the moment, of the long -awaited structural reforms, It is likely that the flows that enter are more short term (more associated with the carry trade) and not so much structural (direct foreign investment)“
The Trump factor
This situation occurs within the framework of the open pressure by Donald Trump so that the monetary authority fits rapidly and placing new officials in the agency that are related to their economic policy.
In this line, in addition to his custom of attacking Jerome Powell, repeatedly sliding the possibility of his dismissal, the American president recently decreed the removal of the governor of the Fed, Lisa Cook, a measure that was currently blocked by US justice.
“Trump’s attacks on the autonomy of the Federal Reserve will make their ultimate goal of rate reduction It is much more difficult to achieve, since it could translate into a weaker dollar and a more steep yield curve, “said the Mediterranean Foundation economist.
Source: Ambito
