Los inversores sólo tienen la culpa ellos mismos; Jerome Powell se roba la alegría de la Navidad
El presidente de la Reserva Federal, Jerome Powell, emitió su declaración el miércoles poco después de que la Reserva Federal publicara su decisión de recortar las tasas de interés. El presidente destacó que la Reserva Federal evaluará el progreso en materia de inflación antes de realizar más recortes en 2025.
El presidente de la Reserva Federal, Jerome Powell, sorprendió a los inversores en su declaración después de que la Reserva Federal anunciara nuevas reducciones de los tipos de interés. El presidente expresó que había mucha incertidumbre que requeriría que la Reserva Federal actuara más lentamente antes de realizar más recortes.
Powell expresa que la inflación sigue siendo una preocupación en medio de la decisión de recortar las tasas
Jerome Powell indicó que la Reserva Federal aplicaría un enfoque más cauteloso en 2025 antes de realizar más recortes de tipos de interés. En la decisión política final de 2024, la Reserva Federal redujo las tasas de interés en un cuarto de punto. La institución también señaló dos recortes más en 2025 en su Resumen de Proyecciones Económicas publicado el miércoles.
Lea la declaración de apertura completa del presidente Powell de la conferencia de prensa del #FOMC (PDF): https://t.co/jjyoItUGmt pic.twitter.com/4bHHy3t80Z
- Reserva Federal (@federalreserve) 18 de diciembre de 2024
The decision to make further cuts was widely expected; however, investors were surprised by the “dot plot” indicated in the new policy. The plot suggested the Fed would only reduce its fund rate by half a percentage point in the coming year.
In response to the announcement, markets recorded declines as investors reacted to the uncertainty. The S&P, for instance, fell by more than 3%, pulling from its all-time high, while the Dow Jones Average fell by 2.6%.
The official expressed that he believed inflation would continue to be a challenge in the next administration. The central bankers’ prediction on inflation is reportedly ending higher than expected in this financial year and even higher in 2025.
When the path is uncertain you go a little bit slower, It’s not unlike driving on a foggy night or walking into a dark room full of furniture. You just slow down.
– Jerome Powell
The chair emphasized the economy was still recovering from the shocks that hit the globe in 2021 and 2022. He acknowledged the labor market was where it was required to be and the labor market pressures had subsided.
Powell noted the labor market was still cooling and looser than before the pandemic. He, however, emphasized the cooling was not sufficient to cause alarm. In response, the Fed reduced its unemployment predictions from 4.4% to 4.2% for 2024 and from 4.4% to 4.3% for 2025.
Powell expresses uncertainty on Trump’s proposed policy effects on inflation
Powell also commented on Trump’s policies and the potential for new tariffs. The chair noted that some bankers had evaluated the uncertainty around how the incoming president’s policies would be implemented.
He emphasized that they had also weighed how the policies would affect inflation before making their prediction. He stated the Fed would wait until the policies were implemented before making any further rate cut decision.
Trump announced that he would impose tariffs on China, Mexico, and Canada after he assumed office. Economists warned that increased import taxes would adversely affect the economy, as merchants would pass the increased costs on to consumers.
The Fed, on the other hand, signaled increased concerns about how such tariffs would affect inflation in the new statement.
Other economists suggested that Trump was unlikely to implement the trade tariffs and would only use them as a bargaining chip. Powell stated the Fed did not know much about the new policies and that it would be premature to make any conclusion. He expressed uncertainty about whether there would be retaliatory tariffs or how they would affect inflation.
The Chair expressed his optimism, noting the outlook for the US economy was bright. However, he warned that it was necessary to stay on task.
Investors only have themselves to blame
Does the Fed know it’s Christmas at all? Does Jerome Powell even wish traders well? Wait. Did investors expect anything different from the Fed chair? The good news is that stocks are a little less expensive than they were Wednesday morning.
However, the bad news is that trillions have been wiped off the market following the FOMC meeting. Many investors blame the Federal Reserve’s “hawkish cut” for the mayhem.
This does not get any better. While officials did cut rates, their median projection for core inflation (the important stuff) shows they now expect inflation to persist above their target next year.
It’s looking like next year will bring tighter Fed policy. It is getting to the time when many start turning to resolutions for the new year. Here is a suggestion for the people who set interest rates: publish your estimates of where you expect rates to settle in the medium run.
Then, live by those decisions and do not count on Jerome Powell, the Fed, or Donald Trump to pull you out of the economic rut.
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