The United States approaches the moment when the Fed will have to reduce its interest rates to support employment, said Friday, August 22, the president of the Central Bank Jerome Powell in a long -awaited speech, especially by Donald Trump. A “rapid” degradation of the US labor market should not be excluded and could “justify” a relaxation of monetary policy and, therefore, of interest rates, warned the head of the institution of Jackson Hole meetings, in Wyoming (West).
He adds that the Fed is in a “delicate situation” because the new customs tasks established by the US executive begin at the same time to affect the prices paid by consumers at the risk of reliving inflation.
In theory, the risk of an impulse of inflation encourages central bankers to leave their guiding rates unchanged. But, if they consider that it is necessary to support the activity to avoid dismissals, they tend to reduce rates, which guides the cost of credit for companies and people. “The risks weigh in the labor market are increasing. And if these risks materialize, they can quickly translate into the increase in layoffs and unemployment,” Jerome Powell observed.
A sudden fall in the indebtedness rates of America’s debt
Investors immediately interpreted their speech as a way of preparing the land for fees falls on the occasion of the next meeting of the United States Central Bank in September.
This suddenly decreased the indebtedness rates of the US debt: the performance of two years, the most sensitive to monetary developments, thus passing in a few seconds from 3.78% to 3.71%. The dollar also fell, falling approximately 0.54%, which is likely that the lowest rates lead the course of a currency. On the other hand, Wall Street applauded the words of the Chief of the Fed, the main market rates of US stock stock evolved to increase around 2:10 PM GMT.
Source: BFM TV
