Despite falling oil prices, there could be even higher prices in the USA.
Tomorrow, the Federal Reserve will decide on interest rates, while inflation is at 3.5 percent, which is significantly above the desired level, but the economy appears stable. The market sees a 62 percent chance of maintaining interest rates, but the decision could be close, as several members of the Federal Reserve are open to raising interest rates. The biggest challenge is the unpredictability of the new president’s reaction, in addition to the declining tolerance for rising real interest rates.
The US central bank is set to make a key interest rate decision tomorrow, while inflation remains significantly above the target at 3.5%, and the real economy is stable. The market expects a hold at 62%, but the decision could be close, as several central bank officials have signaled openness to rate hikes. The biggest problem is that the reaction of the new president is unknown, and in addition to the consistently rising real interest rates, the market’s tolerance for uncertainty is decreasing.
