Mexico City. Next year, the US Federal Reserve (Fed) could start cutting interest rates to normalize inflation, analysts at Natixis suspected.
During a webinar, portfolio strategist Garrett Melson noted that the rate slowdown is likely closer than a new factor of 6 percent. He felt that very important technical aspects should be taken into account.
He explained that the drop in inflation is being seen as some of the impacts that triggered it, such as the Covid-19 pandemic, have abated.
He mentioned that if there were to be a return to an environment more similar to that before the health risk, policy rates might not need to be as high as currently stated.
He mentioned that central-level inflation will fall steadily until it hits two levels in the first half of next year, so there is no need to be restrictive on inflation.
He noted that now all he had to do was go into neutral, make a few cuts and end up with a probably flatter curve.
For his part, Jack Janasiewicz, portfolio manager, commented that the data shows inflation levels are returning to where the Federal Reserve wants them to be.
“Right now it’s growing at an annual rate of 1.25 percent, which is significantly less than the 2.5 we contributed to our 2 percent target,” he said.
“There are indications that this last mile may not prove to be as difficult as some believe. Again, inflation may not be as fast as people would like, but the point is that it’s moving in the right direction,” he said.
