The US Federal Reserve (Fed) confirmed this Wednesday a new interest rate decline Reference of 25 basis pointsis now somewhere in between 3.50% to 3.75% annually. This decline is in addition to the 25 basis point cut already made in mid-last September. In this way, the economists of iProfessional Wondering what impact this news will have on dollar bonds in Argentina.
The already expected argument for this cut was “Change in risk balance”. For this reason, the Fed reiterated in the report its commitment to achieving full employment and bringing inflation back to 2% and announced that it would cautiously assess the coming data to determine possible new adjustments.
The Federal Reserve reported that US economic activity continues to grow at a moderate pace while the labor market shows signs of slowing: “Job creation slowed and the unemployment rate rose slightly towards September. At the same time, inflation picked up again compared to the beginning of the year and remains above the official target.” he detailed.
In this context, the organization recognized that uncertainty about the economic outlook remains high and that downside risks to employment have increased in recent months.
The statement noted that the company is ready to change the monetary policy course when risks arise that endanger their goals. To this end, it will continue to monitor a wide range of indicators: labor market conditions, inflation pressures and expectations, and financial and international factors.
The committee was also of the view that the Reserve balances have fallen to a “sufficient” level“, so here we go Purchases of short-term government bonds to keep banks’ liquidity stable.
Fed interest rate cut: impact on Argentina
Currently in Argentina the The positive effect of this measure is that it lowers the reference interest rate that emerging countries will have to issue debt while at the same time returning to the assets of the region’s countries in a more seductive manner.
“The loss has already been priced in. What I think is most important is the predictions for the future. Should we see a looser Fed willing to continue on the path of lower interest rates, this will boost appetite for global risk assets and in this sense Argentina can benefit“, he claims Isaiah Mariniexplains the economist of the ONE618 Fund (formerly Consultatio).
He even points out that this year the emerging, They achieved “impressive returns” on both bonds and stocks, Therefore, a greater reduction in tariffs is required The Federal Reserve can “maintain that appetite.”
In the same sense, Juan DiedrichsInvestment advisor at Capital Markets, agrees that the Fed’s rate cut “is a tailwind for all emerging markets,” because it means lower financing costs and greater attractiveness for Latin American countries.
Therefore he comes to this conclusion “The news is very good and it is lower financing costs for everyone”.
For Andres Repetto, Market analyst at Andy Stop Loss, the Fed’s rate cut “makes money cheaper in the United States.” “That means many dollars that are now parked in North American bonds are leaving these securities when their yield falls and moving into riskier assets.”
In short, for Federico ZerbaEconomist and head of sector economics at the Institute of Sectoral Economics (IES), this interest rate cut by the Fed It is “positive for the country because it motivates a shift of capital towards emerging market and commodity assets, which can benefit us in seeking financing from the Treasury and the provinces. Also in strengthening exports through prices.”.
(news in development)
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