Happy Coincidence

By Isaac Cohen*

                  Federal Reserve President Jerome Powell, last week in congressional testimony, said the central bank may have to increase interest rates. The reason is because, in his own words quoted in The Wall Street Journal 07/11/19), “uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh over the U.S. economic outlook.”

                  It is not because President Donald Trump has asked for a reduction in interest rates that this may happen, it is because several risks, such as the trade tensions and the global slowdown, are darkening the economic outlook. Additionally, Chairman Powell mentioned also that the persistence of low inflation “strengthened the case for a somewhat more accommodative policy.” Therefore, the happy coincidence is that the force of circumstances is contributing to avoid a deeper confrontation between the White House and the central bank.

                  The markets reacted vigorously, with stock indexes approaching new records, while commodities regained strength, with the price of oil climbing above $60 per barrel. This may seem paradoxical, that evidence of a slowdown is pushing financial markets and commodities higher, but the bad news only confirm the expectation that the central bank will intervene lowering interest rates. Be it as it may, as recognized by Bank of England Governor Mark Carney, “the quality of global growth has deteriorated” (The Wall Street Journal 07/11/19). Also, the National Bureau of Statistics said China’s economy is “under new downward pressure,” with a rate of growth of 6.2 percent between April and June, the lowest since 1992.

 *International analyst and consultant, former Director ECLAC Washington. Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO and other media.

About Ramón Jiménez

Ramón Jiménez, Managing Editor de MetroLatinoUSA.Com (MLN). Graduado de la Escuela de Periodismo de la Universidad del Distrito de Columbia (UDC). Email: [email protected]

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