Today the Federal Reserve is expected to announce another 25 basis point cut to its interest ratesin what is their last meeting of 2024.
This would mark the third consecutive reduction this year and with which we bet for bringing borrowing costs to the 4.25%-4.5% range (from the current 4.75% level).
But while the world’s stock markets prepare for the Fed’s announcements, the same thing is happening in a good number of countries.Well, starting today and for a week, there is an avalanche of central bank meetings.
The calendar for this December 18 has not only the US with the Fed, but also to others such as Indonesia, Thailand, Georgia, Albania, Azerbaijan, to name a few economies.
While tomorrow the 19th, powers like Japan and the United Kingdom will do the same, or in Latin America, Mexico, Paraguay and Costa Rica, the same. Closing the week, in Colombia, the Bank of the Republic, which has just cut its reference rate by 50 points, is expected to repeat the movement this Friday.
Eyes on the US
Monetary policymakers are also set to unveil new economic projections, with many investors anticipating a slower pace of rate cuts through 2025. Markets are currently predicting three additional reductions next year, with some expecting a pause in January.
The annual inflation rate in the US rose for the second consecutive month to 2.7% in November 2024, up from 2.6% in October. Meanwhile, the economy added 227,000 jobs, significantly exceeding forecasts, after a sharp drop in October numbers due to hurricanes and strike-related disruptions.
Investors almost assume the Fed will cut interest rates by a quarter percentage point at its meeting, although attention will focus more on the new economic projections from policymakers that will be published along with the decision, in the afternoon.
The decision comes hand in hand with advances in the cost of living. Inflation has not improved much since the Federal Reserve’s last economic projections in September or its Nov. 6-7 meeting.
However, some of its components have undergone changes that have convinced policy makers. that a gradual easing of price pressures, known as disinflation, is occurring.
Housing cost growth has slowed and the personal consumption expenditures price index, which the Fed uses to measure progress toward its 2% inflation target, looks headed for a low reading when November data is released next week. That will not happen, however, until two days after the end of the meeting.
The labor market continues to be one of the central bank’s big surprises. The unemployment rate has increased modestly since the Federal Reserve began aggressively raising rates in March 2022, but at 4.2% it is still below the long-term national average and right at the level that the average Fed official believes represents approximately full employment.The unemployment rate is likely to end the year below 4.4%.
Projections on Colombia
At the last meeting of the Board of the Bank of the Republic, it again cut interest rates by 50 basis points from 10.25% to 9.75%, their lowest level since August 2022. The decision was made by a majority of four votes to three. At the time, it took into account annual inflation in September, which stood at 5.8%.
Now, for this Friday, market operators grouped in the Citi survey consider that the Issuer will adjust interest rates to 9.25%; In fact, almost 100% of the financial system believes that this will be the move.
