The document released this Wednesday by the central bank shows that some members of the Fed have expressed their disagreement with a giant 50 basis point cut in interest rates. Specifically, Federal Reserve minutes indicate that some of its members would have preferred and supported a 25 basis point cut. Among the main arguments that supported this position was that this reduction “would be in line with the gradual path of normalization of monetary policy”, which would give time to accurately assess the degree of restriction of the same later.
The minutes also show that some members of the organization are not at all sure that inflation is on track to reach the 2% target that the Fed maintains. “Almost all participants expressed greater confidence that inflation is moving sustainably towards 2%”; Furthermore, the document shows how “almost all participants assessed that the risks to achieving inflation and employment targets are in balance”, indicating that some members do not consider the situation in both indicators as idyllic as presented by the Fed.
Even before the release of the minutes was known, Anna Wong, an analyst at Bloomberg Economics, highlighted the possibility that Jerome Powell had to resort to the art of persuasion, taking into account that the dot chart reflected the fact that reducing rates by 50 basis points was not considered by several members of the Federal Open Market Committee. Thus, they would have approved the reduction contrary to what they expected, and therefore everything indicates that Powell “exercised soft power of persuasion to get his colleagues to support him”, explains Wong.
On the other hand, and although the Fed minutes indicated that a “substantial majority” of its members supported the giant cut of 50 basis points, some traders read between the lines that there was opposition to this reduction more vigorous than expected. . This led them to conclude that the central bank could maintain the price of silver at the current level: thus, the odds of this happening increased to 22.3%, from 14.8% on Tuesday and from 0% a week ago. .
For its part, the American stock market continues to record increases, with the Dow Jones and the S&P 500 reaching historic highs. The industrial index rose 0.82% to 42,424 points, while the S&P 500 rose 0.52% to 5,781 points. Furthermore, the Nasdaq 100 gained 0.63% to 20,234 units, driven by the chip manufacturing sector.
