But the story is not in the numbers but in the "pressures"
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The American Federal Reserve stopped lowering interest rates today after three consecutive cuts, keeping it at a range of %3.5 - %3.75.
But if you read between the lines of the latest "Powell" statement,
you will realize that the battle is no longer just about "inflation",
But around the "independence" of the institution itself.
Why did the Federal Reserve decide to stop now?
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The retreat of the "job panic":
The Federal Reserve removed from its statement the tone of concern about the labor market, and now sees that risks have become "balanced".
The labor market has stabilized, and there is no longer justification for continuing rapid monetary easing.
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Inflation stubbornness:
With strong economic growth reaching 5.4%,
The bank fears a second wave of inflation that may spiral out of control,
Especially as commodity prices continue to rise.
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The internal house division:
For the first time, we see open opposition within the council;
Where members (Miran and Waller) voted against the fixing, calling for an additional cut..
This reflects the extent of divergence in economic views within the corridors of the Federal Reserve.
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What is beyond interest rate numbers?
We are witnessing the end of the "Jerome Powell" era.
He has only two meetings left before his departure in May, and today he faces unprecedented pressures;
From the Department of Justice investigations into "office renovations"
To battles in the Supreme Court over the president's authority to dismiss governors.
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Markets no longer see 3.5% as an interest rate,
Rather, it looks at the "identity" of the new incoming.
Market bets are strongly leaning towards "Rick Rieder" from BlackRock to succeed Powell,
This means we may transition from the "economic data" school to the "understanding market flows" school.
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In summary:
The Federal Reserve is trying to maintain its balance amid a political and legal storm.
When monetary policy becomes part of "political skirmishes",
The number loses its meaning and "stability" becomes the most expensive currency.
In light of these transformations,
Do you think that the "independence" of the Federal Reserve has become just an old slogan?
Share your opinions in the comments,
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