The Federal Reserve (Fed) closed an intense year in the fight against inflation with the decision to leave interest rates as they are. This represents the third consecutive pause, after having raised the price of money eleven times since March 2022 and leaving it at 5.25%-5.50%, the highest level in 22 years.
After verifying that inflation was cooling, with a rise in November of 3.1% compared to last year, and a fall compared to October, all analysts assumed that the Fed would not raise rates, nor lower them. This option is the one that arouses the most interest among experts and investors, being able to glimpse when the United States central bank will begin to cut interest rates. The statement leaves this option open, with three cuts in the cost of money throughout 2024.
The issue has changed. Three months ago, all analysts predicted that there would be a new increase in rates before the end of 2023. However, a labor market that remains strong, although losing intensity, consumption that is partially receding and inflation in retreat, despite not yet reaching 2% of the Fed's target, all of this has caused the Reserve governors to rethink the situation.
Now a soft landing is in sight, which means that the specter of a recession disappears after the application of a restrictive policy as has not happened for decades. Gone is the terrible month of June 2022 when the price index rose to 9.1%.
Given this soft landing, forecasts held that the rate cut could begin in June, although more options were given for July or September. The president of the Fed, Jerome Powell, must clear up doubts or continue avoiding giving an answer on this matter.
