“We foresee at least one more cut this year and possibly two if the labor market deteriorates even more”explained the Director of Fixed Income Strategy of the Financial Research Schwab Center, Cooper Howard. He considered that “this should reduce the types (of interest) in the short term”, but added that “Long -term is likely to remain within the range”.
For its part, from Pepperstone They explained that the lack of official data “raised the relevance of Fed speeches and sectoral movements.” In this regard, they recalled that “the partial closure of the US government, which is already six days, continues to leave an unusual informative vacuum, so, with the main paralyzed federal agencies, investors are forced to operate with alternative compasses.”
Similarly, in Inviú They echoed the situation and mentioned that the budget paralysis “is complicating the decision making of the Federal Reserveinvestors and homes. “They stated that” the September employment report scheduled for last Friday was deferred, and Consumer inflation reports, producer inflation and retail sales next week are probably not published“
And they added: “In the absence of more complete information during closure, The Fed could advance the expected rate cut for December to its end of the month meetingalthough with the complete inflationary effects of tariffs yet to feel, a cut in October is not guaranteed. “
Miran insists with new cuts
From Pepperstone They commented that “in the absence of relevant macroeconomies data, the market will focus on the statements of some Fed councilors like Stephen look as in any news from the political front both in the US with a potential agreement that leads to the end of the partial closure of the government.”
Look, one of Trump’s bishops in the Federal Open Market Committee (FOMC)the agency within the Fed that decides monetary policy, He spoke on Tuesday and said that Trump’s tariff policies will be less than expectedwith margin so that the Fed can continue to reduce interest rates.
“My inflation forecast is more optimistic than that of some of my colleagues”they said they look during an event in the association of funds managed on Tuesday. “Therefore, I consider that the mandate enters less conflict, unlike what others believe.”
Look made reference to the mandate of the monetary authority. This is the obligation to maintain inflation around 2%per year, when it is currently closer to 3%, and maintaining unemployment below 4.5%, when, according to August data, August, It was 4.3%, although with signals of deterioration.
The resistance to lower the rate
In this framework, The president of the Bank of the Federal Reserve of Kansas City, Jeff Schmid, said Monday that the authorities must maintain pressure on inflation due to the risk that the increase in tariffs contributes to the increase in price.
“Although futures foresee a 88 % probability of a rate cut in October, Schmid’s statements They suggest that the Federal Reserve should keep the rates without short -term changes, since inflation continues above the final objective of the central bank“They raised from Wealth Managment.
However, according to the Fedwatch what measures cme, Market expectations for a 25 -point cut is even higher than in the start of the week and is already 94.6%.
This Tuesday, the head of the Fed of Minneapolis, Neel Kashkarihe was in the same tune and stressed that they are already observing some signs of “Stanflation”. And he deepened: “The question is whether this inflation for tariffs will have short life and then go to an annual inflation or if it will stay above. It is very early to reach some conclusion“
In addition, he warned that “If the Fed drastically lowered the rates there would be an increase in inflation” And he was skeptical that “With some rate cuts are going to lower the interest of mortgages”as Trump demanded repeatedly.
“No one sees a recession on the horizon”
For its part, the head of the Fed of Atlanta, Ralph Bosticalso provided statements this day. “To be an effective central bank, our work is to have a long -term horizon.” On point, He made a questioned to the constant pressures of the Trump administration for lowering the rate. “We must not respond to the things that happen daily or monthly.”
“We must understand that our horizon is longer term and It is important that they do not drag us into the scope of things in the short term, because if we begin to be a reactive institution, there would begin to be much more volatility“, held.
At another time, BOSTIC He stressed that Atlanta fed It has measurement tools outside the data provided by the federal government, since these “were not enough to really understand what was happening in the economy.” In fact, this day was also known that the Regional Central Bank estimated a 3.8% increase in GDP for the third quarter of the year.
In this context, he dismissed a recessive scenario for the economy, unlike at the beginning of the year, when Trump’s new tariff policy began: “When we talk to companies, the catastrophic scenarios were discarded. If we have some hard scenariosbut not catastrophic so that they lead us to think that there will be a recession. “
Source: Ambito
