Christine Lagarde, and Jerome Powell, Chairman of the US Federal Reserve, were reassuring by stating that we are not far from the moment when the Fed will have the confidence to make a first cut in key rates, he did not fail to point out that the US economy is the best among the major Western economies, with higher growth rates and lower inflation than many others.
During his testimony to the Senate, he also said that the Fed is well positioned to achieve its objectives and is quietly waiting for indicators that will confirm that inflation will develop favourably, which should not delay any more according to him, providing the window of opportunity necessary to adjust the policy rates downwards.
Investors have been looking forward to this speech. The prospect of cheaper credit will boost US consumer confidence and should allow growth to hold at high levels (3.2% annualised in the 4th quarter of 2023). After significantly adjusting their monetary policy targets, investors expect a first cut in US policy rates at the June or July meeting.
The U.S. economy continues to be well-positioned to perform in this election year.
We invest in both the bond and equity markets.
