It’s been a busy month and a busy week for central bankers. Not only the Fed has taken action on rates. 5 central banks have cut rates this week and a total of 12 within the month. And only one, Brazil, has hiked. Aside from special situations (Turkey, Russia and Argentina), the synchronized actions of central banks are evident, despite the fact that inflation is picking up in several economies, as you can see in the table below. Why cut then? Perhaps because high rates are starting to affect growth, and unemployment, which is typically part of the dual mandate. 2024 has been a transition year from a hawkish view that started in 2022, to a dovish stance, on the back of lower inflation, but the question is of this trend can continue into the new year without creating inflationary tensions. And it looks that the year will start with a pause for the Fed.
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