The American Central Bank meets next week for the third time from the return of Donald Trump to the White House, in an economic panorama from above next, and under the arrows of the Head of State. The result of the Federal Reserve Meeting (FED), scheduled for Tuesday and Wednesday, has few doubts in the eyes of the vast majority of finance players.
The monetary institution must leave its rates at the level that has been its own since December, in a range between 4.25% and 4.50%. Their officials said they first wanted to measure how the economy was going to land at the magnitude of the protectionist offensive launched by Donald Trump. However, even if regular economic barometers show an increase in nervousness, official indicators follow content (4.2% unemployment in April, 2.3% inflation in March, slightly above the objective of the Fed).
The problem is what will continue. During their last meeting, Fed officials degraded their forecasts for the first world economy, anticipating less growth, more inflation and unemployment.
Not panic “
The commercial war between Washington and Beijing leads to exorbitant customs duties that put an end to exchanges between the two powers. And the minimum surcharge of 10% implemented by the Republican billionaire in products from the rest of the world, to cocoa that is not cultivated in the United States, also adds the daily life of US companies and homes.
“It is difficult to say at this time if the economy will enter a recession, but customs duties will at least reduce growth,” said AFP Loretta Mester, former president (2014-2024) of Cleveland’s Fed (north of the United States).
In this context, freezing rates are “the right thing”, even if that means reducing them faster than in case of objective degradation of the activity, adds what it now teaches in the Business School in Wharton, Pennsylvania (East). If fed officials “reduce rates now, that means they are worried, and it will be worse,” says Belinda Roman, professor of economics at the University of St Mary, in San Antonio, Texas. Because, she told AFP: “If the markets think that panic fed, then everyone will really panic.”
“Cold Head”
All this comes in an electrified atmosphere by the constant Donald Trump’s peaks against the Patrone of the Fed, Jerome, or “Jay” – Powell. At the end of April, he considered that it was “more than the time” that his mandate “ends” and described him as “immense loser”, while assuring that “he had not intended” to send him back. His criticisms have barely attenuated since then.
The Republican said this week before the press that he “was not a big fan” of Jerome Powell and reiterated in capital letters in his social network of truth that the institution should reduce its rates, which swore that “there was no inflation.” Sometimes, the heads of state publicly disapprove monetary policy, says Loretta Mester, “which is different this time, how is” Donald Trump “.
The former Cleveland Fed president said he was convinced that his former colleagues will continue to make their decisions independently. Fed officials, resume Belinda Roman, “must be able to keep calm, maintain a fresh head despite all pressures and agitation around him.”
Source: BFM TV
