Closes without ads or statements the Emergency meeting of the FED boardmeeting last night to examine the situation, after the wave of duties announced by President Trump and the series of days of passion experienced by the equity markets (and not only).
The need for take stock On financial stability it also emerged following the “Pressure” exercised by Donald Trump On the number one of the Fed Jerome Powell, in the belief that it is the “right time to cut rates”.
Powell meets bankers: early cut?
One was held yesterday “Upon closed doors” meeting of the Board of the Federal Reserve at 11.30 local (when it was 17.30 in Italy). At the center of the debate the situation of the markets, the economic perspectives and the monetary policy choices. Decisions that will not be able, evidently, to be postponed to the next meeting, which would have been scheduled for 6-7 May.
Instead, the idea of a imminent cutting of rates before Easter. According to Bloomberg, the data on swap contracts on rates indicate that investors see almost 40% probability that the Fed will cut the rates of 25 points base next week. But some experts believe the counterproductive choice For financial markets, already in panic, because it would only strengthen a pessimistic sentiment.
THE Future Fedwatch listed on the CME, which silent the pulse of market expectations, after having served up to 5 cuts from 25 points each this year, they stood at Four cuts from 25 points (about 1% less), however above the 2-3 cuts previously estimated for 2025.
Fatal duties for the US economy
Analysts of JP Morgan they joined the host of those who see a worsening of economic conditions In the USA due to the duties and drastically revised down the GDP growth predictions to +0.3% from 1.3% previous.
Also Goldman Sachs cut the growth predictions of the fourth quarter of 2025 to 0.5% from 1% previous and raised the probability of recession to 45% next year from the previous 35%. And the number one of Blackrock Larry Fink believes that the US economy is “probably already in recession And the inflationary pressure much stronger than the market expect “.
Inflation expected in the ascent
The president of the Fed Jerome Powellfor its part, maintains a prudent attitude and observe the prospects of inflation. Last week, after the last wave of duties announced by the Trump administration, Powell reiterated that the central bank is in a hurry to change monetary policy.
Friday, the number one of the American central bank admitted that the duties announced by Trump are significantly higher than expected and probably they will push the higher inflation of expected.
“Inflation will go up and growth will slow down, but for me it is not clear at this moment what the appropriate path will be for monetary policy. We will have to wait and see how it will end before making such changes “
He concluded.
