Analysts expect the Federal Reserve to maintain rates in the 3.50%-3.75% range at its next meeting, given inflation still above 2% and a robust labour market.
The Federal Reserve (Fed) is preparing to keep its benchmark interest rate in the 3.50% to 3.75% range at its next meeting, according to analyst consensus. The decision responds to the persistence of inflationary pressures and the strength of the US labour market, which reduces the scope for monetary easing.
The Puente report indicates that the Fed faces the challenge of balancing its dual mandate: to promote maximum employment and ensure price stability. However, inflation continues to be above the medium-term target of 2%, fuelling expectations that monetary conditions will remain tight for the rest of the year.
For investors, this scenario maintains the appeal of fixed income. High rates allow for securing higher nominal returns over extended periods, especially in investment-grade bonds. Analysts believe this context could last at least until the end of 2026.
The impact is also observed in the currency market. In the last 30 days, the global dollar index (DXY) rose by 0.7% to 100.7 points, supported by the level of US rates. Nevertheless, experts foresee moderate dollar weakness against other developed currencies due to the persistent fiscal and trade deficits of the United States.
Europe and Latin America: Cautious Central Banks
In Europe, the European Central Bank (ECB) is set to maintain its benchmark rate at 2.4%, while market consensus estimates it could reach 2.65% by the end of the year. This scenario helps sustain the relative strength of the euro, which is projected to be around 1.15 dollars per euro during the third quarter.
In Latin America, central banks continue to show cautious stances. Uruguay, Paraguay, and Mexico recently kept their benchmark rates unchanged, while Brazil and Chile await new definitions. In currency matters, the dollar's advance has hit several currencies in the region, with notable depreciations of the Bolivian, Chilean, and Argentine pesos. In contrast, the Colombian peso and the guaraní appreciated against the dollar in the last month.
For Spanish investors with exposure to dollar assets or US bonds, this high-rate environment offers profit opportunities but also implies a higher cost of financing in foreign currencies. The evolution of the euro-dollar exchange rate will be key to determining the final return in euros.
The Fed's next meeting will be closely watched by the markets, which will seek clues about the future path of rates. Analysts recommend maintaining a diversified portfolio and paying attention to inflation and employment data to be released in the coming weeks.
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