El paso al frente de la Fed hace prever nuevas alzas de tipos

The Federal Reserve's decision to increase interest rates by a quarter point, despite opposition from the White House during an election year, has sent a message to the market that there will be further rate hikes before 2027. This, like the Chinese philosopher Lao-Tse's quote, marks the beginning of a long journey for the US economy.

Initially, it remains unclear where this new path will lead, but analysts are already assuming that the magnitude of this move - the first increase in the price of money in over three years, defying the expressed wishes of Donald Trump - may be just the first of several. The markets are wagering on an additional rate hike before the end of the year, reflected in the indices of Wall Street after the Fed chair's speech.

The Fed's tightening of the money price, as expected by over 90% of analysts, came with nuances that the Fed chair, Kevin Warsh, did not anticipate, as reflected in his brief press conference and responses. Warsh signaled that inflation is too high and has been for too long, while the Fed's official statement claimed that the rate hike would bring about a quicker return to the 2% target and anticipated price stability.

These messages, along with bankers' expectations and the history of the US central bank, have fueled the expectation of another rate increase before 2027. After all, within a single economic cycle, the Fed has only approved a single isolated rate hike in 1997. The Fed's message is clear: the rate hike today is likely not the last, according to Lale Akoner, a global markets strategist at eToro.

Of the 18 Fed officials, 16 predict at least one more hike this year, with four expecting two more. Thus, for eToro, a new hike is now the baseline scenario, with the possibility of an additional move if inflation remains persistent. Most members of the Open Market Committee project two rate hikes this year, according to economic projections, and it is likely that the October meeting will be omitted given its proximity to the mid-term elections.

This scenario is based on upcoming CPI reports and the evolution of energy prices. For now, the Fed's decision undermines the White House's narrative that there is no inflation problem on the path to the midterm elections on November 3rd, providing political ammunition to Democrats with Trump's candidate for Fed chair, which prompted an angry response from the US president.