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Fed prepares for lower rates



If almost all players expect this decision from the Federal Reserve on Wednesday, not everyone is at the same wavelength as their needs.

US Federal Reserve (Fed) for the third time in a row interest rates Wednesday To support the activity weakened by the trade war?

Almost all market players think so given the evolution of commodity futures, but some economists doubt the need for this "adjustment" and the Monetary Committee (FOMC) remains very divided.

this two-day money meeting should open a new way quarter percentage points decline (0.25%) guide rates this lowers them Between 1.5% and 1.75%.

"They did nothing to deter markets.Yapan We've been betting on the decline in new rates for weeks, Joseph said Joseph Gagnon of Peterson's Institute of International Economics (PIIE).

This former Fed economist also points to peers "middle cycle settings"75 points, as defined by Fed boss Jerome Powell, dating back to 1995 or 1998.

If the Fed cuts rates again on Wednesday, It will have reduced the cost of credit by 75 basis points since July..

Jerome Powell will hold a press conference at 18:30 GMT after the release of the traditional press release.

President Donald Trump stepped up to attack the Central Bank on Thursday, several days before this monetary meeting, to demand a rate cut to apply to the zero rate, as in the Eurozone again.

"Look at our competitors in the world, Germany and others REMUNER borrow money"said the president tweeted."He misses his homework if he doesn't lower his rates, or even ideally."economy.

The White House host didn't tweet for two weeks at one of his favorite scapegoats, Fed, campaigning to slow down and re-election. He has treated her as "pathetic" and "incompetent" in the past.

3.1% in the first quarter compared to the same period of the previous year and 2% in the second quarter, US economic growth weakened in the third quarter and may fall below 1.5%According to analysts, especially due to the global slowdown in weight in the manufacturing industry and commercial tensions. But for all of 2019, for this consecutive 11th year of expansion, growth must remain good at 2.2%.

The government will make the first prediction of US GDP on Wednesday at the Fed meeting.

compartment

Inflation is still quiet and below 2% target Fed & # 39; den.

Since their last meeting in September, Fed officials have been cautious about their speeches. Richard Clarida, number two. "obvious risks"he also stressed that monetary policy is not a stone and that a long cycle of interest rate cuts should not be expected.

For Oxford Economics experts "Although some Fed officials suggest it may be time to consider a rate-down stall, we believe FOMC leaders tend to relax.".

In the minutes of the previous meeting, a few members of the Committee pointed out that expectations for low-interest markets should be slightly biraz grounded biraz because it supports the search for return on equity. Some also claimed to be the Fed "Provide greater clarity as to when this recalibration of monetary policy will end in response to business uncertainties".

Some independent economists also doubt the effectiveness of this monetary easing. "It is not interest rates to solve the problem that poses a risk to the economy. If they apply 25% tariffs on Chinese goods, it's not zero rates that will help!"AFP economist Joel Naroff said.

The three members of the Committee voted against rate cuts in September, opposing Jerome Powell, and this time may be numerous.

But Jerome Powell "have the necessary votes"To get a rate discount," says David Wessel, an expert at the Brookings Institute.It's not Boris Johnson, who's trying to get his votes for Brexit, but he's gonna restrict the maneuvering room.Federal Federal boss, W Wessel says.


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