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Fed: what do the specialists expect for the markets after knowing the minutes of the meeting?

  • Political conflicts will slow construction growth, according to Capeco

According to the minutes of the session, officials were largely pleased to be able to stop early rate hikes and move in smaller, more deliberate steps as the economy adjusted to a more expensive credit.

“A slower pace (…) would allow the (Federal Open Market) Committee to better assess progress toward its goals of maximum employment and price stability,” indicate the minutes released Wednesday.

In this regard, Alberto Arispe, general manager of Kallpa SAB, commented that it’s about “good signs” for the markets, in view of the different variations registered in recent months.

“We expect the volatility to continue. The base case is that the market may bottom sometime in the first quarter of next year. We believe that there could be a new fall in the market, but if that were the case, I believe that the short-term floor established in the first 10 days of October should be maintained”said the specialist.

Among the factors that worry the market, he pointed out, are the war between Russia and Ukraine, China’s isolation policies – due to the increase in COVID-19 infections – and, most importantly, the inflation figures from the United States.

“That is what will determine whether or not the Fed loses its aggressiveness in raising rates.”Arispe maintained.

Meanwhile, César Romero, head of research at Renta4 SAB, said that this announcement was as expected by investors, so the movement has been “quite weak so far.”

“In any case, a rise of 50 points is expected for December. In this case, the stock will most likely continue to rise until a ‘pivot’ can be seen in the message”Romero said.

In his opinion, the expert considered that they are evaluated factors such as unemployment in the United States, the growth of the Gross Domestic Product (GDP), the Russia-Ukraine war and the price of commodities.

“During future weeks, we would be seeing reports on the results of retail companies [por el Black Friday] to see how they have fared and if sales have been better than before”said.

As for the exchange rateRomero said that it is probable to see some volatility in local politics given the latest events, such as the resignation of Aníbal Torres, former president of the Council of Ministers. “At least the rise in rates will slow down, which is one of the main factors for the rise in the exchange rate during the year”he remarked.


The data

On December 13 and 14, the Fed will hold its next meeting. Along with a monetary policy statement, the US bank will release new projections from officials on the path of inflation, unemployment and interest rates.

Source: Elcomercio

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