In four days the time has come: then the US Central Bank, the Federal Reserve, will announce whether the interest rate policy will be adjusted. Many investors secretly hope for an interest rate reduction, because lower interest rates mean cheaper money and make risky investments – such as crypto – more attractive.
Yet the market seems almost certain: that interest reduction is not coming this time. But why does the FED brake the foot for the time being?
Battle
The FED only lowers interest rates if the economy really requires it and inflation has cooled down sufficiently. At the moment the image is mixed. On the one hand, the American labor market is surprisingly good: in April, according to the Ministry of Labor, 177,000 jobs were added and unemployment remained stable at 4.2%. In addition, inflation stubbornly hangs over the 2% objective. Based on these figures, there is no direct reason for the Fed to intervene now.
On the other hand, there are also signs of economic weakness. The gross domestic product (GDP) unexpectedly cheated by 0.3%, while it was precisely a small growth. Moreover, the job growth was disappointing. More and more analysts express it out loud: the American economy may be heading for a recession.
All eyes on July
Based on those disappointing figures, many investors still expect an interest rate reduction, but not in May. The gaze is now focused on July. Although the FED has not yet made any concrete commitment, according to analysts, more and more signals indicate in that direction – including the disappointing labor market figures.
Source: https://newsbit.nl/rentebesluit-vs-komt-eraan-beleggers-verwachten-pas-in-juli-versoepeling/
