The Federal Reserve System is going to this environment for the third time this year, the meeting, framed by the attack on the independence of the Central Bank by President Donald Trump, and that for investors will not leave large owners on this occasion. The markets are clear that interest rates will not be reduced at this meetingAnd they hope that the next drop in the price of money will occur at the July Assembly, when there will be new news about the policy of tariffs in the White House, having completed the 90 -day extension of the tariffs declared on April 9. Trump’s pressure continues, but everything indicates that Powell will remain impassive, will once again wait for commercial uncertainty to crumble, for the better or worse.
The calendar, which currently throws the markets, has changed since they were preserved last week. If last Thursday, the reduction in types was dropped in the United States until 2026, with the first expected reduction in June, Now investors believe that until July there will be no reduction in the price of moneyAnd this, in total, from that moment next year there will be only three abbreviations of 25 base points.
If this roadmap is made, this will mean that Jerome Powell, the president of the federal reserve system, will not move interest rates until the tariff dilemma is allowed. Currently, Powell is in the Center for Trump’s criticism for not more aggressively reducing the types, while the first was always defended, since his appointment as the President of the Fed, the independence of the Central Bank against political power.
The reality is that for the Fed is much more sense not to risk on lower types, not knowing how commercial negotiations between the United States and the rest of the world will end. There are economists who warn of the inflationary danger that exists if you finally enter the tariff war that raised Trump, and this is one of the reasons why Powell will be careful and does not start for lower types, which can release a new wave of inflationary pressure.
In addition, at a meeting on Wednesday, the Fed does not plan to update its macroeconomic picture of the forecast, which also confirms the need to be patient with a reduction in the type. If the situation follows his channel, In June, the Fed will have more information about the development of the tariff warWhich will allow them to decide on the most founded types.
Michael Krautzberger, a global IT director with a fixed income of Allianz Gi, explains the dilemma that Powell is now facing. “Trump’s commercial policy set the Fed in a very difficult situation, causing greater uncertainty in financial markets, companies and houses. The US economy is now faced with a double problem: on the one hand, less economic growth is expected, and on the other hand, the rebound in inflation, which complicates the double target of the Fed: maintaining employment at a high level and controlled inflation, ”he explains.
Krautzberger emphasizes how Powell’s plan can change, always depending on what is happening on the commercial front. “Powell made it clear that so far they will maintain a prudent attitude. They want to observe how tariffs affect the economy before taking new measures, although President Trump insists that the types are reduced in the short term, ”he says. “If the current tariff policy does not change in the coming months, it can force the Fed to intervene if the economy is rapidly worsening,” the expert says.
The prospects of the European Central Bank
The European Central Bank planned its next meeting of monetary policy on June 5 and,, Unlike the federal reserve system, it is expected for the ECB that this meeting will have 25 main points. In addition, investors are prone to the fact that the next movement will be in September, but the ECB will be reduced if the market expectations are satisfied, because later they do not expect the Central Bank more than more than reduction of the type.
The economic situation seems easier for the ECB than for the Fed, although, although the uncertainty in relation to tariffs is also in the air, analysts, in general, have more doubts that this dispute ultimately shoots inflation in the eurozone. “The central banks and tax authorities have enough space to support growth in front of their American colleagues,” City explains. “The expected effect of US tariffs on Europe is a simpler problem for the ECB than those that suggest for the Fed,” the US Bank explains.
