The Federal Reserve (FED) maintains its position from Await What is the impact that the policy of the President of the United States, Donald Trump, has in the economy of the country. Until that time, interest rates will not lower. What he has done is Reduce the growth reasons – three tenths by 2025 – and increase that of inflation.
For example, the US central bank decided on Wednesday Leave the reference rates in the range between 4.25% and 4.5%. They stayed at that level for six months.
This long -term break is produced after three cutbacks in a row. The FED initiated this descendant cycle in September, When he reduced the price of money with 50 basis points.
The decrease came after almost fourteen months in which interest rates remained without changes in the reach of 5.25% and 5.5%, maximum since January 2001.
The US Central Bank reduces the cash prize In November —Ant two days after the presidential elections were celebrated in the United States – And also in December. In both cases the movements were 25 basic points.
The establishment of Jerome Powell again chooses to maintain caution to have more visibility about what Trump’s policy is like –Both the commercial and the public prosecutor– They will influence the first economy in the world.
Provisional, It seems that the United States evades the coup that has assumed the rates Taxes by the Republican. Or at least the effects are not as serious as planned.
In reality, The American Gross Domestic Product (GDP) has contracted 0.2% In the first quarter of the year with regard to the same period of the previous year. The fall is a tenth lower than the estimate.
The US economy therefore suffers less than expected, at the same time that inflation is growing less than expected.
The United States Consumption Price Index (CPI) rose in May to 2.4%A tenth more than in April. The underlying percentage, which excludes energy and food, remained 2.8%. The data was more positive than that of analysts who were expected.
The same applies to the Personal Consumer Gank Index (PCE). The favorite FED indicator to measure inflation was moderated to 2.1%in April. The underlying rate was softened to 2.5%.
Inflation therefore, although is held above 2% as a purpose of the FED, It is not activated as a result of the Commercial War.
The tariff fluctuation given by Trump did not, at least at the moment, have had, significant effects On the labor market: The unemployment rate continued in May with 4.2%.
The United States created 139,000 jobs in the fifth month of the year. Although the figure is less than the jobs of 147,000 April, it also exceeded the expectations of economists.
According to the figures from the ADP Payroll processor, the American private sector created 37,000 new jobs in May. It is the worst record since March 2023.
Trump vs. Powell
This latest data caused Trump would load against Powell again. The Tycoon called the central banker “foolish” For not folding to your types of cutting.
He came to insinuate that he could try “to force something”, so that the banking supervisor also reduces them and said that “soon” will name his replacement.
Despite the pressure exerted by the White House, the Fed again gambles on caution. In LBP they believe that the institution “will wait for clearer signals to delay the labor market and the end of increased inflation” Before restoring the cuts.
In Credit Mutuel Asset Management they think in the same way. “It is unlikely that the FED is considering lowering the types until it has greater visibility of the combined effects of the economic and regulatory measures that are announced by the Trump administration,” they explain.
Generali Investments Economists even consider that Waiting is “the best response from the Fed”.
The Fed President himself explained that for the media that “The effects on inflation (of rates) can be short -lived”, but they can also be “more persistent”.
“Avoid this result depends on The size of the tariff effects and the time they take to go completely to the prices“He said.
Powell has admitted that some of these effects have already been noticed and more “in the coming months” has been demanded.
Less growth, more inflation
During the last meeting of each quarter – as the one who has just taken place – the members of the FED Open Market Committee (FOMC) revised their economic predictions.
On this occasion, central bankers have reduced their growth sessions for this year and for the following and increased their inflation forecasts.
That’s how the Fed hopes that US is growing 1.4% in 2025, three tenths less That three months ago. They then predicted an extension of 1.7%.
Moreover, they expect the American GDP to increase by 1.6% in 2026 – two less – while maintaining the estimate by 2027 at 1.8%.
The institution expects the prices to scale 3% in this exerciseThree tenths more than in March. He calculates that too Inflation will reach 2.4% in 2026 and 2.1% in 2027. The prognosis is two and one tenth respectively until the published three months ago.
It also goes further A slight increase in unemployment. It therefore stipulates that the unemployment rate will be closed this year in 4.5%, a tenth, and will remain in that percentage at the end of 2026.
Two drops of types in 2025
FOMC members have also published Your expectations about where interest rates will be found In the short and medium term.
On this occasion, those responsible for monetary policy They have maintained their projections for 2025, But adapted from 2026 and 2027.
Exactly, they expect that The rates end at 3.9%this year. That is, they are considering 50 basic points that are cut in the rest of the exercise.
It is equal to two decreases each with 25 basic points, each, The most common movement performed by central banks.
The market expects these cutbacks to take place in September and December And that the Fed is preparing the country for the descents, both during the next meeting, which will be held on July 30 and on the Jackson Hole Summit.
Those responsible for monetary policy have reduced the rhythm of the cuts of the following exercises. Now they consider those reference rates They will be 3.6% in 2026 and 3.4% in 2027.
That is, they remove a decrease in each of the next two years.
