US rates: Powell's debut does not rule out a fourth rise

In accordance with market expectations, the Federal Reserve decided to raise interest rates by 25 bp, raising the cost of money from 1.25% to 1.5%. According to the statements, the bullish path, despite still aligning with the FOMC's monetary tightening program, will continue with three other events in 2018 and two in 2019, with the reserve's discretion to interrupt the plan in the event that economic data does not confirm the prefixed targets.

It should be noted that, after almost two years, when it was time to vote there were signs of disagreement over agreeing on a day. Two members of the Committee opted to maintain the level of current rates. In fact, although the short-term interest rate curve will assume a more interesting profile from here to the next few months, the spread's progressive narrowing between the US government's yield with a two-year maturity and the one at ten-year shows the emergence of a long-term curve increasingly flat. This is a signal that brings us to think of a slowdown in economic activity.

Indeed, there is no reason to not believe that an excessive tightening can paralyze a system that is already showing a few cracks: this is a confirmation that there is incompatibility between unemployment data--apparently flourishing and reaching minimum pre-crisis levels--and inflation data--a representation of consumer expectations--which fails to reach the target values. Future scenarios are expected to be variable and without challenges: after reaching an expansion of 2.5% in 2018, the Fed Governors' estimate median sees, in the long run, GDP growth expanding at a slower pace, demonstrating an intrinsic skepticism on the effectiveness of the tax plan promoted by Trump.

L’America, dunque sembrerebbe crescere in modo solido e gli ultimi dati del Consumer Confidence Index (oltre le aspettative e ai massimi dagli anni 2000) confermano la presenza di aspettative positive sugli scenari economici futuri.

Ultimately, the succession of Janet Yellen is not expected have substantial changes: with New Chairman Powell, who "shares Fed's values," it is expected that monetary policy will remain conservative and in line with its capabilities of sustainable economy.