“Current data do not give us any indication of the need to move in either direction.” This is how the Fed defended its decision this week to be patient in the return to monetary policy normalization that began two years ago. Its chairman, Jerome Powell, alluded to the existence of mixed signals that suggest caution, especially regarding the uncertainty over the global economy stemming from protectionist risks and Brexit.
However, Powell also reiterated the strong fundamentals of the US economy. In fact, the main international organizations suggest that the loss of global economic momentum will be short-term. Once again, the strength of the major economies following the adjustments made during the crisis, as well as favorable financing conditions, emerge as arguments for optimism.
Uncertainty is a poor companion in investment projects and can affect households’ consumption outlook. To maintain the economy’s momentum, a necessary condition is that favourable financing conditions prevail. However, economic certainty is a sufficient condition. Looking to the future with optimism, being prepared to make the most of it, and having our authorities make it possible—or at least viable—are the keys to improving certainty in the medium and long term.
Banks guarantee favorable financial conditions. Their job is to finance the future we all aspire to. The sector’s vulnerabilities are closely linked to the vulnerabilities of the economy itself: political uncertainty, financial market instability, and risks to medium- and long-term financial stability arising from the continuation of monetary measures with distorting potential, such as negative interest rates.
