Will the American rates be reduced this year?
I recently wrote a blog post in which I emphasize the market-related concerns of the American economist, chessgrandmaster, professor in the international economy at Harvard University, former International Monetary Fund (IMF) Chief Economist and co-author of This time is different: eight centuries of financial foolishnessKenneth Rogoff.
In that blog post I noticed the warning from Rogoff that the United States are about to a one -off debt crisis, powered by decades of complacency about “free” loan in the midst of Ultralow interest rates. Nowadays the American net government debt is approaching 100 percent of the gross domestic product (GDP) and gross debt are US $ 37 trillion. This surpasses all other advanced economies. Rogoff believes that the rising treasury revenue and escalating costs for debt service, which now exceed the defense budget, indicates the end of this era.
The article also investigated Donald Trump’s personal investments, including the relatively recent statement of the purchase of US $ 100 million in bonds since January 2025.
The purchases set the issue of a conflict of interest and strategic positioning, just like his calls for the Fed to lower the rates, for FED chairman Jerome Powell (who has refused to resign so far) to resign, as well as the Federal Reserve Fraud.
Jerome Powell has always insisted on responding to data, while Trump has insisted that the economy now needs cuts – which suggests that they can be raised again later if the economy requires it.
According to all reports, the inflationary pressure is increasing, with the core consumer price index that rises 3.1 percent in July, an increase of 2.9 percent in June. Inflation is therefore above goal and rises.
Nevertheless, the market seems convinced that the Fed will quickly lower the rates. Futures -Markets currently imply a slightly more than 80 percent likelihood of at least one percentages of reduction in December.
During the annual Jackson Hole Economic Policy Symposium on 21-23 August, Jerome Powell recognized a “shifting balance of risks” in the American economy, including signs of stress on the labor market.
“In general, although the labor market seems to be in balance, it is a remarkable type of balance that is the result of a clear delay in both the supply of and the demand for employees,” adds: “This unusual situation suggests that the downward risks to work are rising. And if those risks occur, they can do this quickly in the form of Shara.”
The creation of jobs in the US is flat, but the unemployment rate is not really stated because, as Powell stated, “a tighter immigration policy has led to an abrupt delay in the growth of the labor. The result is that the demand for work (the counter) and the supply of work (the denominator) is set.
Powell warned that inflation risks remain increased.
“Higher rates have begun to increase the prices in some categories of goods” … “The effects of rates on consumer prices are now clearly visible. We expect that those effects will accumulate in the coming months, with high uncertainty about timing and amounts.”
Nevertheless, perhaps because concern about the labor market is now outweighing the concern about inflation, Powell has effectively suggested possible “policy adjustments” in the coming months.
“Compiling the pieces, what are the implications for monetary policy? In the short term, risks for inflation are tilted up and risks for the disadvantage of the disadvantage – a challenging situation. When our goals are in tension like this, our framework is for us a year ago, and the stabel of the stabiel of the stabiel of the stabeling of the stabeling of the stabeling of the stabeling of the stabeling of the stabeling of the stabiel of the stabiel of stabel en de stabiliteit van de stabiliteit van de stabiel van de stabiel van de stabiliteit van het werk van de stabiliteit van het werk, is nu een jaar geleden en de stabiliteit van de stabiliteit van het werk van de stabiliteit van het werk van de stabiliteit van het werk van het werk en de stabiliteit van de stabiel van de stabiliteit van de stabiliteit van de stabiliteit van het werk, en de stabiel van de stabiliteit van het werk van de Stability of the work of the stability of the work of the stability of the work, and it is now an annual one.
The FED can already lower the rates in September, although the inflation and baneng data that will appear between occasion will be decisive.
For many investors, the above is a side issue. They believe it makes sense to bet Trump will get what he wants.
You can read my previous article here:
America’s threatening debt crisis
Roger Montgomery is the founder and chairman of Montgomery Investment Management. Roger has more than three decades of experience in fund management and related activities, including stock analysis, stock and derivative strategy, trade and effects. Prior to the establishment of Montgomery, Roger positions in Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
He is also the author of the best -selling investment guide for the stock market, value. Aabel-Hoe to appreciate the best shares and buy them for less than they are worth.
Roger regularly appears on television and radio, and in the press, including ABC Radio and TV, the Australian and Ausbiz. View upcoming media performances.
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