Few surprises at the May Federal Reserve meeting. The Jerome Powell team maintained interest rates in the fork of 4.25% -4.5% for the third time and alerted, as many experts expected, of economic uncertainties. But the encounter gave rise to multiple interpretations by experts.
So, And siluk, jefe de Global Short Duration & Liquidity y Janus Henderson managerconsiders that the decision of the Fed to maintain the price of money reflects “a cautious approach in an environment marked by economic uncertainty” in addition to underlining the intention of the agency to “maintain stability, while closely monitoring the evolution of economic conditions.”
Siluk also understands that by maintaining monetary policy, “the Fed indicates its willingness to adapt its tools to changes in economic data and risks.” Likewise, the expert interpreted the reaction of the markets after the decision of the Fed -Caída of the stock market and rise in bond prices- as a greater focus of investors “in concerns about employment and growth, within the double mandate of the Fed, which in inflation.”
While, Ashish Shah, Chief Investment Officer de Public Investing en Goldman Sachs Asset Managementit emphasizes that, for the moment, the Fed remains waiting for uncertainty to be cleared. “The recent employment data, better than expected, have supported the waiting position of the Federal Reserve, and it is the responsibility of the labor market to weaken enough to resume its relaxation cycle,” argues the expert, who adds that any weakening of the labor market, however, “could take several months to become evident.” In this way, he sees “biased probabilities” towards another maintenance of the types at the type.
Jean Boivin, responsable del BlackRock Investment Instituteremember that if the high current tariffs on trade between the United States and China are maintained, “the consequent interruptions of the supply chain will probably lead to a contraction driven by the supply in the United States this year”, which considers a situation “very different from a typical recess Contraction, but the activity can also be recovered quickly if those interruptions dissipate.
“We were aware of whether President Powell would recognize this nature driven by the offer of any possible slowdown,” admits Boivin, who regretted that the body was not explicit about it, “leaving the markets that read between lines and with little guidance on the future policy of the Federal Reserve.” However, Boivin highlights a brief comment from President Powell: the Federal Reserve “does not have the right tools to deal with the problems of the supply chain.”
Therefore, the expert, although awaits a contraction of the activity in the United States, “the possibility that it is ephemeral and the constant support of megaforzas such as AI keep us over -deprived in US variable income.”
Implications
Ray Sharma-Ong, Responsible for multi -active investment solutions for Southeast Asia of Aberdeen Investmentssees several implications in the need expressed by Powell to examine concrete data before determining the course of monetary policy. One, that the graphics of points of March 2025 – which indicated two cuts by 2025 – no longer serve as a guide for the markets. “The Fed will take into account the increase in uncertainty and will provide the market for a review of revised economic projections, and a points graph at the June 2025 meeting,” the expert predicts.
Secondly, he believes that the bar for type cuts “has increased” due to the greatest uncertainty. This makes it more difficult for Fed to cut the types of preventive way to support economic growth, “since the risk of high inflation is high due to the impact of tariffs.”
In the last place, Sharma-ong recalls that since the Fed is only willing to act when descents occur in hard data-such as a combination of unemployment increase and weak payroll figures-this indicates that in the event that the Fed cuts the types, “it is likely to do so during or after July 2025”. The reason is that the impact of tariffs on the economy in general will take several months to be reflected.
In conclusion, and taking into account that the Fed will remain waiting during this period, “we are supporters of regions outside the United States, such as Europe and China, which have strong fiscal and monetary support.”
Credibility
In addition, David Macià, CREAND INVESTMENT AND MARKET STRATEGY STRATEGYemphasizes that in an environment in which tariffs can lead to greater inflation, while reducing economic activity, “the dilemma is evident.” When in doubt, “the Fed will not lower the types, unless the economic slowdown is evident.” The most powerful tool of a central bank, according to Macià, “is probably not the ability to set interest rates or” create “money, but its credibility.”
Therefore, he considers that Trump’s threats, which he even considered Powell, “achieve the opposite of what they intend: the Fed has to ensure that a reduction in the interest rate is not interpreted as a concession to the president.”
Besides, Miguel Ángel GarcíaDiaphabanum investment director, highlights that the Fed “is not in a scenario that implies urgency in continuing to lower interest rates,” however, it emphasizes that the commercial war generates uncertainty both in growth and in a possible strong increase in inflation, “hence its cautious position.” Nor does it forget the pressures Trump is exercising on the Fed, “even with threats to fire Powell,” to reduce the types of intervention to boost the economy, but above all to finance the maturities of the great American public debt at more affordable costs.
With these premises, Garcia concludes that the market expects two or three casualties of an additional percentage point of the types throughout the year. With such restrictive types, -Argumenta- the Fed has space to precipitate the descents, “in case the economic panorama shows fragility, which is an important safety network for risk markets.”
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