Amid a busy market and the growing relevance of cryptocurrencies with bitcoin trading above US$34.500, this week Wall Street is paying attention to every move by the Federal Reserve, the US central bank. Last Wednesday, the Fed announced its latest policy decision, keeping interest rates stable, but signaling the possibility of future increases, if necessary.
At the time of publication, the European Stoxx 600 index showed recovery after hitting a 10-month low, while oil values declined. This reaction came as Israel's military intervention in Gaza was more moderate than some investors expected.
European Stoxx 600 and S&P 500 futures registered an increase of approximately 0,7%. The price of Brent oil fell to US$89 per barrel, and the value of gold fell to less than US$2.000 per ounce. Additionally, 4,86-year Treasury yields rose to XNUMX%.
Will Powell maintain or raise interest rates on Wednesday?
Since September, the Fed maintained interest rates in a range between 5,25% and 5,50%, the highest level observed in two decades. Furthermore, it revealed forecasts that indicate the need for a further increase in rates later this year, to align inflation with the 2% objective.
Federal Reserve Chairman Jerome Powell, speaking at the Economic Club of New York, gave indications that the central bank is considering maintaining these rates during the next monetary policy meeting. However, Powell expressed concern that inflation was still at high levels. He emphasized that additional interest rate increases are not ruled out, especially if the economy continues to show robust signs.
James Fishback, founder of Azoria Partners and longtime collaborator of David Einhorn, shared his perspective on the situation. For Fishback, the Fed should remain in this stance until the end of the current year. He also mentioned that the current scenario does not show signs of a significant slowdown in growth, which would be essential to align inflation with the established objective.
Additionally, Fishback projected that based on recent trends and data, it would not be surprising to see the Fed raise rates in early 2024, with the possibility of maintaining or even exceeding current levels for an extended period.
The Federal Reserve's current situation is crucial, especially in the context of an ever-evolving crypto market. With Fed forecasts released in September, it is expected that interest rates could be reduced by 0,50% over the next year.
