J. P. Marín-Arrese | Jerome Powell boasts having curbed the recent inflation flare through resolute tightening of monetary policy.  While the need to perform rate hikes seems obvious, it seems far from evident it stood as the paramount driving force. For, as is now clear, the Fed delivered negative rates throughout the inflationary bout and only undertook lukewarm efforts to drain the excess liquidity fearing the danger of a credit-crunch....

The Fed has lowered interest rates by 0.5 points, thus aligning with the market, which anticipated a roughly 70% probability of a 50 basis point cut. As a financial institution noted this morning, “the risk for credit markets is that a 50 basis point cut may be interpreted as an emergency measure. Consequently, the gradual approach and soft landing that have benefited this type of asset could be disrupted. On...

Link Securities | According to a Reuters poll, a majority of economists surveyed believe that the Federal Reserve (Fed) will cut its policy rate by 25 basis points at each of the three remaining policy meetings this year (September, November and December). Moreover, only nine economists out of 101 surveyed expected a cut of half a percentage point next week, when the Federal Open Market Committee (FOMC) meets, while 92...

Bankinter: Fed minutes of the 30/31 July meeting: Main messages: (i) Current situation: the economy is advancing solidly, albeit at a markedly slower pace than in 2H23, the labour market is cooling and inflation is moderating, although it remains somewhat elevated. (ii) Outlook: lower growth in 2H24 due to a weaker labour market, but growth in 2025 and 2026 will remain in line with its long-term potential. Unemployment could pick...

Bankinter: The Fed meets expectations and keeps interest rates (Fed Funds) at 5.25%/5.50%. With respect to the macro picture, it maintains the GDP forecasts for 2024, 2025 and 2026. However, it revises upwards both Inflation (PCE) and Underlying Inflation in 2025 and 2026 and continues to miss the 2% target until 2026. The Unemployment Rate is also revised slightly upwards in 2025, 2026 and in the longer term. With regard...

Banc March: Round of statements from Fed members, where the word “patience” has been recurrent in their speeches and they delay the first cut to the end of the year and even 2025. The Atlanta Fed president believes that inflation is too high and does not consider it appropriate to lower the cost of money until the end of the year. He also said he was open to raising rates...