With federal reserve officials indicating an extended comment on interest rates, investors and economists will look to the President of Jerome Powell this week in search of evidence of what the central bank may eventually lead to take a step, and when.
A fourth consecutive meeting may be raised without another reductiontideeFrom President Donald Trump. But politicians were clear: before they could take a step they needed to resolve large question marks about definitions, immigration and taxes. IsraelAttacksNuclear sites also provided another component of uncertainty for the global economy.
At the same time, the American economy at the same time, if cooling slowly, a little economy is expected to move average any time soon. Investors are betting that the central bank will not reduce borrowing costs until September as soon as possible, according to prices in future contracts.
“The safest way to enjoy this situation, when there is no urgency to reduce prices at the present time, is just sitting on your hands,” said Sima Shah, the world’s leading asset management strategy.
Politics makers gather from 17 to 18 June. They will issue a statement at 2:00 pm Washington time, and Powell is scheduled to take questions from the correspondents after 30 minutes.
Difficult options
It is widely expected to introduce the president’s tariff on a large scale of prices and slow growth, and the risks that officials have developed in the last post -modernization.statement. This can eventually force the Federal Reserve to make a difficult choice as the economy pulls them in opposite directions.
“I don’t think at this point there is anything that is concerned.” “But the longer the uncertainty – for the consumer, is for companies regarding planning – the more interest in the basics of the economy.”
However, until now, the economy does not highlight signs of warning that will push the federal reserve to intervene.
The unemployment rate lasted for three months, even with the slowdown in job growth, partly because aDecreaseIn immigration also works to reduce workers’ supplies. The higher the unemployment rate, the more the Federal Reserve, the higher the defense against high inflation.
However, the price data also did not provide little concern. The basic inflation increasedLowerIn May for the fourth month in a row. Treasury bonds increased last week on the news, supported by the bet on more than one reduction rate this year. The return on notes decreased for two years, which is the most sensitive to the policy of the Federal Reserve, by more than seven basis points per week to 3.96 %.
However, officials are likely to wait for an additional months of data to understand how much it is transferred to consumers.Air Force IsraelOn Iran it will raise additional questions. Federal reserve officials are traditionally seen through energy prices, but the shock of oil prices may affect inflation.
New expectations
New economic expectations and price expectations this week can provide useful instructions for how officials think. They will be the first since Trump’s “Liberation Day” announced the comprehensive definitions on April 2.
While analysts think about the results, the range of probability is unusually large.
Shah said that officials expect unemployment this year to rise useful above the 4.4 % of those who expected in March, indicating that policy makers may reduce prices before the fourth quarter.
Some federal reserve officials, including Governor Christopher Waller, have already indicated openness to the pieces because they believe that policymakers can see the expected impact of definitions on consumer prices as temporary – as long as inflation expectations remained. This is in line with market measures that indicate that merchants also believe that the tariff price will be short -term.
But if officials raise their expectations for inflation, this can reduce the number of cuts they offer this year to one, from Monday in March. German bank. Strategy in Barclays Beware of such a “hawk” surprise in a note for customers.
Officials may also consider the great uncertainty about the final state of Trump’s policies and simply leave their expectations unchanged.
“I will be surprised if the points move a lot.” “It has been a roller trip,” since the last Federal Reserve’s expectations in March. “On the network, I think we may be somewhat similar,” he said.
Late support
Some economists say that the timing of the following Federal Reserve’s movements will eventually return to the period of Trump’s policies to appear in economic data – and the strength of this that raises fears about shrinkage.
In the Bloomberg Survey of the Economists, which was made from 6 to 11 June, 42 % of the respondents expected that the Federal Reserve will retain fixed rates until there is tangible weakness in the economy.
“It expects price discounts in October or December in response to the slowdown in the most famous labor market that will be achieved by that time.”
This story was originally shown on Fortune.com
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