Os investidores são os únicos culpados; Jerome Powell rouba a alegria do Natal
O presidente do Federal Reserve, Jerome Powell, divulgou sua declaração na quarta-feira, logo após o Fed divulgar sua decisão de cortar as taxas de juros. O presidente destacou que o Fed avaliará o progresso na inflação antes de fazer novos cortes em 2025.
O presidente do Fed, Jerome Powell, levantou as sobrancelhas dos investidores em sua declaração depois que o Fed anunciou novas reduções nas taxas de juros. O presidente expressou que havia muita incerteza que exigiria que o Fed agisse mais devagar antes de fazer mais cortes.
Powell expressa que a inflação ainda é uma preocupação em meio à decisão de corte das taxas
Jerome Powell indicou que o Fed aplicaria uma abordagem mais cautelosa em 2025 antes de fazer novos cortes nas taxas de juros. Na decisão política final em 2024, a Fed reduziu as taxas de juro em um quarto de ponto. A instituição também sinalizou mais dois cortes em 2025 em seu Resumo de Projeções Econômicas divulgado nesta quarta.
Leia a declaração de abertura completa do presidente Powell na conferência de imprensa #FOMC (PDF): https://t.co/jjyoItUGmt pic.twitter.com/4bHHy3t80Z
— Reserva Federal (@federalreserve) 18 de dezembro 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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