The most moderate inflation than expected and a significant reduction in the American trade war and China reduces fears of strong pressure on American families and companies in the coming months, which reduces recession predictions and gives space to feedingERAL reserves to leave interest rates in their location.
JP Morgan Chase and Barclays were among the companies that modified their expectations on Tuesday to reflect a more benign economic path after the United States and China reached an agreement on the weekend to reduce the prices imposed since early April.
JP Morgan Economists now see the chance of recession in less than 50 %. Barclays economists no longer think about recession. Both of them previously expected that high definitions will not affect consumers and companies, spending on braking and economic activity.
Financial markets also re -adjust prices yet The United States of Chinese agreement, Reducing the bets that feeding You will need to start lower interest rates by July to reduce the economic recession. Investors now expect interest rate discounts only by the end of the year, starting in September.
A report from the Ministry of Labor issued on Tuesday (13), Show that consumer prices increased by 2.3 % in April, In the lowest annual progress in more than four years, these bets have strengthened and expected to be feeding It will make the gradual cuts at the end of the year.
“There was a fear that the customs tariff raises inflation, and this still could happen, but today’s data at least gives investors a feeling of relief that inflation is still in the right direction,” said Jake Dollarid, CEO of Longbow Asset Management.
However, “the uncertainty about the tariff policies and the effects of inflation in the future will keep them far away.”
Last week, and feeding It has maintained a short -term attention in the range of 4.25 % to 4.50 %, as it has been since December.
president feedingJerome Powell said, at the time, until then, I haven’t seen any sign of the collapse economy, with inflation still over the goal of 2 % of feeding And commercial policy is developing quickly, the correct decision was to wait for more clarity before the prices are modified.
The prices of the primary consumers, except for food and energy, fluctuated, at a rapid pace of 2.8 % from the previous year, showed data on Tuesday.
In addition, the prices of some goods remained vulnerable to tariffs, such as clothes, cars and trucks, stable or fell, unlike expectations. This happened even as the new definitions announced by US President Donald Trump in March and April.
Economists continue to predict the increase in the prices of products in the coming months due to the definitions – which amounted to 145 % from Chinese imports, until the weekend swelling reduced the rate to 30 % for many of these products.
Even with this suspension, the rates are much higher and cover a wide range of imports in general from any other time in the past eighties.
The Trump administration has closed only a trade agreement since it announced its flood on April 2.
“With a little clarity about the final status of commercial policy and with policy formulations from feeding Perhaps it has failed to expect any developments or inflation. We are now expecting discounts at rates feeding (Instead of three) and we believe that the first pieces will be held in September (instead of July), “Green expert Gregory Daco wrote.
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