The United States Federal Reserve officials are seen to be in a phase that will end the year with an increase in interest rates as something that is no longer necessary, but regarding the challenges ahead and when and how the round of rate reductions is still uncertain.
This issue may seem far-fetched. The closely watched inflation indicator is at 3.5% annually, well above the Federal Reserve's 2% target. On that basis policymakers and politicians are still worried about the rise of inflation in an economy with low unemployment, and the rhetoric of officials more suggests that interest rates will be kept on hold for a while.
On the other hand, some show a 'hawkish' attitude which is also one of the reasons for opening the possibility. On that basis, Federal Reserve officials are increasingly confident that the federal funds rate range of 5.25% to 5.5% that has been in place since July is enough to reduce pressure in the economy and lower inflation.
Determining that inflation is low enough to initiate a rate cut may depend on data for the next few months, political complexities such as presidential elections, financial market conditions, and hopes to limit any increase in the unemployment rate.
The first step towards those discussions will take place at the Federal Reserve's final meeting of the year on December 12-13, where, in addition to deciding on the latest action on interest rates, policymakers will also have to make an estimate of the direction of interest rates.
Policymakers next week are expected to keep interest rates on hold for the third time in a row and in new policy statements and assessments assess the data that developed along with a "soft landing" in which economic activity and job growth gradually slow as inflation continues to decline.
