with the aim of controlling inflationwhich continues to derail and does not give up, the Federal Reserve (irrigated), the central bank of the United States this Wednesday lowered its intervention rate in that country’s market by three quarter points, or 0.75 percentage points, taking it to a range between 3 percent and 3.25 percent, when expected inflation this year. Now for 5.4 per cent, as against the earlier forecast of 5.2 per cent.
It is the third consecutive increase of this magnitude that led Wall Street to close in the red and its main indicator, the Dow Jones Industrial Average, fell 1.70 percent after a volatile day.
(You may be interested in: Fed raises its rates by 0.75% and expects almost zero hike this year,
At the close of trading on the New York Stock Exchange, the Dow Jones fell 522.52 points to 30,183.71 units, while the selective S&P 500 also declined 1.71 percent, or 66.02 integers, to 3,789. Closed at .92 points. For its part, the Nasdaq Market Composite Index, which brings together core technology companies, fell 1.79 percent, or 204.86 units, to a full 11,220.19.
An impact that can also be felt in the country on various fronts, which are as follows:
1. An increase in inflation in the United States puts more pressure on that country’s central bank, the Federal Reserve (Fed), to raise interest rates.
Two. By raising rates, the Fed seeks to curb consumption and investment so that prices do not rise.
3. The Fed’s efforts to curb inflation by cracking down on consumption and investment have raised fears that a slowdown in economic activity will turn into a recession.
four. The rise in interest rates in the United States attracts capital to the country that can come from other economies, such as Colombia.
5. Given this situation, more pressure arises so that the Banco de la Repubblica adopts a decision to raise rates at the next meeting on 29 September, not only to control inflation, which is 10.84 percent per year in the country.As of August, but Because doing so keeps the investment attractive, especially for so-called swallow-cap capitals, who are always looking for the highest returns.
6. If US economic output is expected to slow, expect lower demand for raw materials.
7. If the demand for raw materials, such as oil, falls, their prices fall (as is already happening) and Colombia, which exports oil, will receive less foreign exchange for its sales, by volume. In view of the possible fall in
8. If dollar penetration into the country is reduced due to low oil prices, the dollar increases in value because they are less abundant, as has been the case already.
9. Dollar outflows due to higher interest rates in the United States also put upward pressure on the dollar in Colombia.
10. In short, high inflation in the United States can lead to lower incomes for Colombia due to lower oil prices, additional increases in the dollar, and additional increases in interest rates.