Is this the end of the US interest rate hike cycle?

According to Serrano, Federal Reserve Chairman Jerome Powell made it clear that the matter still stands Opens door to More downloads; However Tone The meeting changed to one Less restrictiveWhich means that these potential increases are unlikely. In addition, Powell stated that there is balance Between the risk of doing more and the risk of doing less.

There are other factors to consider Low probability enhancement Of the high rate. The first is that Long term rates It increased significantlyThus tightening financial conditions. “In May, the 10-year Treasury rate was 3.3% while in October it was almost 5.0%, the highest level in the past 10 years, although part of this increase has reversed in recent days and currently stands at 4.5%. These increases “They’re doing homework.” To the Federal Reserve Bank, which makes Fewer additional downloads are required Higher long-term interest rates make credit more expensive for families and businesses, thus reducing inflationary pressures, Serrano explained. To clarify the above, the economist pointed out that mortgage rates were at 3% a year and a half ago and are currently recording 8%.

The US interest rate hike cycle has come to an end

Inflation is another factor to take into consideration. Although it is true that general inflation An increase was recorded in October From 3% in June to 3.7% for September, this explains the recovery Increases in energy prices. Serrano points out that the relevant data exists in… Core inflation This is by excluding most volatile Measurement, such as food and energy, provides a Better perspective From the future trend. Core inflation is ongoing and will continue to decline Therefore, according to the expert, “with housing rental prices continuing to decline, which is the element that largely explains the deviation of inflation from the target. Medium-term inflation expectations are well established.

There is a third consideration Monetary policy works with delaysFor example, one company took out high loans at a time when interest rates were at historically low levels Credits In most cases They had no need to refinance Which will be implemented at the highest rates recorded today. In case FamiliesSerrano explains that social isolation measures in recent years have allowed this Build savings That, along with Financial support However, it allowed families to mitigate the impact of higher rates. This situation will end next year.Then the effects of higher interest rates will increase their effectiveness according to the monetary policies applied.

“Global rates will also start to fall, which will also happen in Mexico.”

In this panoramic image, Serrano notes that BBVA México considers the cycle of interest rate increases in the US to have come to an end and estimates that The gradual downward cycle will begin in May next year. “This means that global rates will also start to fall, which will also happen in Mexico.”

condition “The end of the US interest rate hike cycle” Published in El Financiero on November 9, 2023.