The Federal Reserve plans to cut interest rates in the US

In his most popular speech of the year, Federal Reserve Chairman Jerome Powell made clear that the US central bank is ready to cut interest rates in September.

“The time has come to adjust monetary policy. The direction is clear, and the timing and pace of rate cuts will depend on emerging data.

Powell said policy would be adjusted to protect the labor market from further weakening after the last few negative months, while preventing inflation from rising again as it did during the pandemic.

“We do not seek or welcome a further cooling of conditions in the labour market.”

After more than a year of holding interest rates at 5.3 percent, the highest in more than two decades, hopes are high for the Fed’s mid-September meeting.

And while Powell didn’t give a clear indication of how big the cut might be, experts like Maurizio Carta say markets are already moving toward a possible cut of up to half a percentage point, rather than just 0.25 percent. With the obvious effect…

“Money will become cheaper for Americans, and everything will be denominated in dollars. For example, mortgages, loans, credit cards. Everything.”

Carta added: “If you have lower rates, companies have an incentive to spend money, invest money. It stimulates the economy.”)

According to Carta, the consequences of this decision will also have global implications, including in Latin America.

“If the United States economy gets a big boost, everyone has to come together because it is the number one economy in the world that has a huge impact on everything.”

Authorities are using high interest rates to try to cool the economy and thus combat rampant inflation. With the inflation index falling, the moment now seems opportune.