The Federal Reserve is sticking to script despite Trump’s victory and cutting rates by 0.25 points.

Federal Reserve System (FRS) fell this Thursday Guys official US interest in 0.25 points percentages as expected, up to the interval 4.5%-4.75%. The market took this for granted, despite the fact that the obvious victory Donald Trump and Republicans in presidential and legislative elections may bring with them some inflationary economic policy this makes life difficult for the US central bank. In fact, all eyes are focused on the messages its president can send. Jerome Powellabout the next steps the Fed will take.

Thus, the Federal Reserve cut rates by 0.5 points in mid-September, what time he was in first layoff in more than four yearsafter their increase at an unprecedented pace and scale to combat the inflation crisis (5.25 points

from March 2022 to July 2023). Moreover, he left the door open for similar cut in all its two meetings the rest of the year (this Thursday and another in December) in line with its dual mandate to achieve price stability and maximum employment possible.

The Fed, as noted this Thursday, “believes that risks to achieve their employment and inflation targets (sustainable 2% over the medium term), they essentially in balance. Economic prospects uncertain and the committee recognizes the risks to both sides of its dual mandate.”

inflation In the US, therefore, it fell from 9.1%, which it reached in the summer of 2022, to 2.4% compared to October last year. That’s the lowest figure since February 2021, although slightly higher than analysts expected (2.3%), already heightening expectations that the Fed reduce the rate of descent to a decrease of 0.25 points instead of 0.5, as in September. But the cuts, after all: Unemployment remains at 4.1%.but over the past twelve months it has risen and the central bank has made it clear that doesn’t want things to get worse

additional.

Trump earrings

This entire scenario is now being realized due to the adopted policies. Donald Trump when he returns to the Oval Office on January 20. The President-elect’s program includes tax cuts without spending cuts government, which implies a larger deficit and is inflationary. Consequently, having learned about his victory, interest national debt US sales volume between private investors in the market has increased, especially in the long term.

The market is waiting to see what impact these new economic policies may have on the Federal Reserve’s plans. According to some analysts, in the short term he will have to lower rates of interest to slower pace than I planned. Others think that they may have to lower the value of money. no changes and even re-download at the end of next year. And all this in a context in which Trump has shown in the past that he has no problem public pressure organization to take measures that it considers appropriate.

Europe, on the other hand, has seen a short-term decline in debt interest rates, evidence that investors believe that European Central Bank (ECB) could be forced below interest rates in euros more aggressive what was planned to stimulate activity. The eurozone thus has a very open economy dependent on exports, which, if repeated, could be harmed by the tariffs and trade wars that Trump launched in his first term.