The US Federal Reserve possibly cut the rates the last quarter of the year: indicates ING

After keeping the rates intact for a new period, the bank ING warns that Fed He is taking a cautious approach to the current situation. They do not rule out that the cuts arrive by the end of the year, anticipating that they will surely be more pronounced for that moment.

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• Jerome Powell warns about risks of “Stanflation” After keeping the rates between 4.25% and 4.5%.
• ING He believes that the cuts could be delayed, but be aggressive when they arrive.
• Bitcoin rebounds after the announcement of the Fed and signals of possible commercial agreement.

Yesterday, the US Federal Reserve. He made the decision to leave the reference interest rates unchanged, leaving in the range of 4.25% to 4.5%. However, the statements of the president of the agency, Jerome Powell, have raised the expectations that, although there will be no immediate cuts, when they occur could be more aggressive than expected.

During the press conference after the announcement, Powell mentioned a rare but worrying term: “stagflation “. This economic situation, characterized by the coexistence of high inflation with stagnant economic growth and high unemployment, resurfaces as a ghost that could alter monetary policy plans.

ING anticipates a more aggressive monetary policy, but late

In front of this panorama, analysts of the Dutch investment bank, ING, indicate that the signals issued by Powell suggest that the Federal Open Market Committee (FOMC) He is in no hurry to change the course.

The entity emphasizes that Powell himself said “Uncertainty about economic perspectives has increased” and “Risks of higher unemployment and higher inflation have also increased. ” These statements reinforce a position to wait and observe, at least during some more meetings.

ING warns that This delay could be extended until September, and that, when it finally acts, it could be more aggressive to counteract the accumulated effects of inaction.

The conservative approach of the Fed It would be motivated by various factors, including persistent disruption in global supply chains and commercial tensions. The possibility that these frictions intensify inflation represents an obstacle to moving towards a more lax monetary policy.

Powell’s statements were followed by both traditional markets and in the crypto ecosystem. In particular, Investors were attentive to the possibility of a cut in rates in June, something that, after the press conference, seems less likely in the short term.

However, the cryptocurrency market responded with optimism. Bitcoin It went from USD $ 96,000 to USD $ 99,500 from Wednesday’s announcement. Part of this recovery is also attributed to former president Donald Trump, who hinted at the possibility of a commercial agreement with a relevant economy, which improved appetite for risk assets.

The rebound of Bitcoin reflects a growing perception among some market actors: the lack of immediate action by the Fed It could open space to price movements anticipating future stimuli.

MONETARY ESTEFLATION AND POLICY: A delicate balance

The mention of stagflation by Powell is not less. Although the term has been little used in recent years, its involvement is serious. For many economists, simultaneously face inflation and economic slowdown considerably limits the tools of the Central Bank.

Reducing rates in an inflation environment can further feed inflation. On the contrary, keeping them high during a deceleration could exacerbate unemployment. In that context, the Fed It seems to opt for prudence, waiting for lighter signals before acting.

For ING, This prudence is understandable, but also risky. The entity warns that if expected too much, accumulated damage may require a much more drastic intervention. In his words, the cuts could “Be delayed, but be more abrupt when they arrive.”

The role of central banks in front of mixed scenarios

This episode once again demonstrates the difficulty faced by central banks when navigating mixed scenarios, where indicators do not move in a coordinated way. Labor data could show strength while inflation persists or even gets worse.

Therefore, the Fed I might not be able to offer clear signals until past summer. Meanwhile, the markets will continue to react to each word pronounced by their spokesmen, and crypto investors will seek refuge or advantage in volatility.

Written article with the help of an AI content editor, edited by Angel Di Matteo / Diariobitcoin

Original image of Diariobitcoin, created with artificial intelligence, for free use, licensed under public domain.

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