Fed foresees “less restrictive” financial conditions during the coming months

The Federal Reserve predicted this Wednesday in its Beige Book of economic outlook that in the coming months there will be “less restrictive financial conditions”, an indication that interest rates could fall before the end of the year.

“Prospects for future economic growth remained generally positive” and “noted expectations of stronger demand and less restrictive financial conditions over the next 6 to 12 months“, states the text published this Wednesday.

The Beige Book is a publication by the US regulator that analyzes the current economic conditions of the 12 districts into which the Fed divides the country, based on qualitative information collected by each reserve.

In a framework of high interest rates, which have remained in the range of 5.25% to 5.5% since July, their highest level since 2001, the Fed stated that in recent months the demand for loans “remained stable or decreased“, depending on the areas, and the credit quality”was generally healthy despite some reports of rising bad debts”.

The Fed published the Beige Book on the same day that the president of the US central bank, Jerome Powell, appeared in Congress to explain, as every six months, the regulator’s decisions on monetary policy.

Powell stated that the body will decide “with care and consideration“When interest rates go down, a decision to be made”sometime this year”, once it is certain that inflation is reduced in a sustained manner.

The Beige Book also analyzed economic activity and the Fed noted that “increased slightly” since early January. Eight districts recorded slight to modest growth in activity, three others recorded no change and one noted a slight weakening.

The Fed also spoke of the disruptions to shipping in the Red Sea and the Panama Canal, which “generally had no notable impact on businesses during the reporting period“, although they are being documented”increasing pressures on international shipping costs”.