After the northern hemisphere returned from summer vacation, investors remained focused on interest rate cut plans by major central banks. After Federal Reserve Chairman Jerome Powell assured the annual Jackson Hole symposium that “the time has come to adjust our policy.” [monetaria] has arrived,” the first drop in the price of silver in the United States should be made official at the next meeting of the organization, on September 17 and 18, which will undoubtedly have a great influence on the rest of the world.
The fact that the North American giant is starting the process of cutting rates will be confirmation that the major Western economies are immersed in a turning point in their strategy, after the European Central Bank began to cut eurozone rates at its June meeting and will probably maintain this path next week. But first it will be the Bank of Canada, at its meeting this Wednesday, which will resume the cuts already started three months ago.
Signs that major central banks are starting to focus more on avoiding a recession than worrying about inflation, the leitmotif of their monetary policies since they began to face the consequences of the million-dollar printing of banknotes. tickets to deal with the consequences of the pandemic.
In fact, a clear example is Canada, where experts expect its central bank to cut interest rates again by 25 basis points, to 4.25%, after the first reduction of the same amount applied before the summer, in a context of a downward trend in inflation, which is already at 2.4%, while unemployment continues to rise and macro indicators show weakness in the economy.
Precisely, unemployment in the United States will be one of the data that investors will be attentive to this week to verify that there will be no variations in Powell’s words. “The Fed is gaining confidence in controlling prices while the labor market is showing signs of cooling and the growth of personal income is moderating. In this context, the Fed is opening the door to the beginning of a rate cut. It is very likely that on September 18 we will see the first cut of 25 basis points, down to the 5%/5.25% range,” Bankinter analysts estimate.
A process that, according to him, “will gradually spread the feeling that the process of lowering rates is really underway”, knowing that there is a strong chance that the central bank of Sweden will also announce it at its meeting next September. 24 and Switzerland, on 26 P.
In this way, “in September we will have at least five rate cuts, although in different economies”, which will contribute to “an improvement in confidence and the consolidation of a more optimistic market context”, the entity emphasizes.
