The United States Federal Reserve (Fed) is getting closer to moving forward in the easing of its monetary policy with the first cut of the interest rates reference levels, which are currently at their highest historical range. However, the International Monetary Fund (IMF) He put a damper on operators’ expectations and recommended that the central bank wait until “the end of 2024.”
The economic situation of USA It is far from ideal, even though it remains an undisputed world power; but inflation has been behaving within the limits expected and desired by the Fed, The possibility of the first rate cut taking place in September has therefore been generating expectations among traders.
However the IMF He said the monetary authority should not cut rates until “late 2024.” “Despite significant progress in returning inflation to its target level of 2%, the Federal Reserve should wait to reduce its monetary policy rate until at least the end of 2024,” it said in its annual review of the US economy.
According to the organization, “the United States has not paid a high cost for the current configuration of monetary policy” in terms of the slowdown of the growth, waste of employment or reduction in labor force participation; therefore, the Fed would have “significant room for manoeuvre” to continue along the current path, especially considering the “high risks” of a rise in pressure on prices.
In that sense, “it would be prudent to lower the monetary policy rate only after there is clearer evidence in the data that inflation is sustainably returning to the 2% target.”
In this regard, the chief economist of the IMF, Pierre-Olivier Gourinchastold Reuters that the Fed could afford to wait longer to begin easing monetary policy given a strong labor market. But the staff report specifies that this shift should occur “by late 2024,” to avoid further upside surprises in inflation data.
Trump against rate cuts
The former president of United States, Donald Trump, candidate of the Republican Party for the elections November, he assured that, if elected, he will keep the president of the Federal Reserve (Fed), Jerome Powell, until his term ends in January 2028, but he was against a near decline in the interest rates.
Following the failed attack against him last Saturday, Trump expressed in an interview with Bloomberg that he considers Jamie Dimon, CEO of JPMorgan Chase and one of the most listened to voices in Wall Street, as possible Secretary of the Treasury, role that it occupies today Janet Yellen.
Regarding the interest rates, Trump said he opposes a rate cut, something that would happen in September, that is, before the elections. “That is something they should not do,” he warned, as it would give a boost to the economy and the presidency of his rival, President Joe Biden.
Source: Ambito
