Photo Google
By Isaac Cohen*
The optimism generated in the United States by the decline in inflation during the second half of last year, dissipated after the last release of the consumer price index. Last week, the Labor Department informed the index increased to 3.5 percent in March from a year earlier, more than 3.2 percent in February. Therefore, last year’s declining trend in inflation was interrupted by monthly consecutive increases during the first three months of this year.
Reactions did not make themselves wait. The stock market fell sharply, as it became evident that widely anticipated interest rate cuts would be postponed. Some observers went as far as to say that they no longer foresaw a “soft landing,” understood as economic growth with moderate inflation. Instead, an economist quoted in The New York Times (04/12/24) said they were anticipating a “no landing,” with the economy expanding vigorously together with price increases, which would justify keeping interest rates where they are, above 5 percent. The head of the Federal Reserve Bank of Minneapolis, Neel Kashkari foresaw a scenario with no interest rate cuts in 2024.
With the economy expanding vigorously, as indicated by the creation of more than 300,000 new jobs in March, the head of the Federal Reserve Bank of Boston, Susan Collins said “the risks of monetary policy being too tight have receded” (The Wall Street Journal 04/12/24).
*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.
