FOMC decisions can impact markets!

Hello traders! Today I bring news that may make many investors worried. The minutes of the FOMC (Federal Open Market Committee) , linked to the Federal Reserve (Fed), revealed today (02/22/23) that the chances of the United States entering into recession this year after interest rate increases are still high. That is, the American economy may suffer a slowdown soon.

I know it may sound scary , but it's important to remember that high interest rates are a measure used to control inflation and keep the economy in balance. However, it is necessary to wait for the effects that will come from the monetary tightening to decide the extension of the increases.

According to the minutes, the team's forecast maintained an estimate of acceleration in GDP growth from next year, although the projected increase in production in 2024 and 2025 remains below the monetary authority's estimate.

Another important point mentioned in the minutes is inflation. Based on the four-quarter change, total PCE price inflation was projected to be 2.8% in 2023, and headline inflation was 3.2% , both below the December projection. This could mean a drop in inflation in the coming years.

The Fed document also showed that several members of the committee even supported an increase of 0.50 points in the interest rate at the last meeting, 15 days ago . This is because inflation persists at a high level. But it is worth remembering that the decision was taken unanimously by the committee and it is believed that the pace of growth in US interest rates has decreased in intensity.

Read the full minutes of the FOMC (Federal Open Market Committee)

For Fed Chairman Jerome Powell , there is a prospect of a sharp decline in inflation for this year. He confirmed that the disinflation process in the US, with the drop in inflation, is starting, but there is still a long way to go.

But what does all this mean for the investor? In times of uncertainty, it is important to remain calm and carefully analyze market movements. A well-defined investment strategy, with a diversified portfolio, can help minimize the impacts of any crises.

However, it is important to remember that each case is different and, therefore, it is always good to seek the guidance of a specialized professional. Thus, it will be possible to make more conscious and safe choices.

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Analysis of the minutes of the FED, by Fausto Botelho and its impact on the markets

Unraveling the FOMC: Understand how US decisions affect the global economy

FOMC? This enigmatic acronym means Federal Open Market Committee, or in Portuguese, the Federal Open Market Committee. Basically, it is the group responsible for making very important decisions about US monetary policy, including setting interest rates and implementing other measures to influence the country's economy.

What does this mean for us mere mortals? Well, FOMC decisions have a big impact on the world economy. After all, the United States has the largest economy in the world, and most international financial transactions are denominated in US dollars. That is, any change in US interest rates can affect the flow of capital to other countries and influence exchange rates.

But how does it affect our life? When the FOMC decides to raise interest rates, investors can start pulling money out of international markets in search of higher US returns. This can lead to a drop in stock markets, devaluation of foreign currencies and an increase in the cost of borrowing in other parts of the world. That is, our pocket can be indirectly affected.

On the other hand, when the FOMC decides to lower interest rates, there may be an increase in demand for borrowing as the cost of money is lower. This can stimulate the economy and boost financial markets, both in the US and around the world.

As we can see, the FOMC plays a very important role in the global financial scenario. It's important to be aware of the decisions made by the committee, as they can affect our lives in ways we can't even imagine. But at the end of the day, as I always say, it's important to stay calm and remember that the economy is cyclical. Things can get better or worse, but there's always a new day ahead.

Leave your opinion in the comments!