Fed cuts rates by a quarter point following Trump’s US victory

Analysts, despite the election result, did not foresee any surprises in this meeting. And the Fed lived up to expectations. Inflation data for September, with CPI 2.4%invite us to think about improving price controls in the country, despite some surprises. In general, the data is slightly higher than expected by experts for this month.

The fact that the fight against inflation is not yet over has helped the Federal Reserve ease the pace from its cuts in September, when it cut rates a half-point at a time. And analysts, now that Trump has won, even note that the Fed may further ease the pace of rate cuts in the future.

The question in this case is what policies the new American president will pursue, especially in the economic sphere. Analysts emphasize that it may prepare fiscal stimulus packages for the country’s economy, which could jeopardize the recently achieved inflation rate; Consequently, they predict that the Fed may choose to slow its rate cuts. Ignacio Dolz de Espejo, director of investments and product solutions at Mutuáculos, emphasizes that Trump’s policies are likely to involve more growth for the US and less for the rest of the world. “They could also lead to higher inflation in the US and a slower fall in rates than previously expected,” he said.

From the Swiss organization Julius Baer, ​​they delve into how Trump’s “stunning victory promises to bolster United States economic growth, which is already at an acceptable level,” and emphasize that this, together with trade and more aggressive tariff policies, could lead to higher inflation in this country. Janus Henderson experts are also pushing the idea: “We could see episodes of volatility if the Republican mandate leads to extreme measures. Trump, for example, has proposed not only extending the 2017 tax cuts but also increasing them, which could worsen the already bloated federal deficit. He also promised to impose tariffs of up to 60% on imports, which could stoke inflation and raise Treasury yields. In this scenario, betting decisions could further change course.

“In support of its objectives, the committee decided to reduce the target range for the federal funds rate by 1/4 percentage point, from 4-1/2 to 4-3/4 percent. As it considers additional adjustments to the target range for the federal funds rate, the committee will carefully evaluate incoming data, the evolution of the outlook, and the balance of risks,” the Fed said in a statement, later reiterating its goal that the committee is committed to maintaining maximum employment and returning inflation to its 2% target. “

So the Federal Reserve is delving deeper into its traditional message, just as European Central Bank (ECB)caution should be exercised in assessing the situation in the face of future cuts: “In assessing the appropriate monetary policy stance, the committee will closely monitor the implications of the information received for the economic outlook. The Committee will be prepared to adjust its monetary policy stance accordingly if risks arise that may impede the achievement of the Committee’s objectives.“

The Fed, however, emphasizes that in the current scenario, “recent indicators suggest that economic activity continues to expand at a robust pace. Since the start of the year, labor market conditions have generally softened and the unemployment rate has increased but remains low.