Fed maintains interest rates and cost of money enters the electoral debate
Voters feel the weight of expensive credit on their cars, homes and cards, and the issue is starting to appear at the polls, according to MarketWatch.
BY THE X-TRADER NEWS NEWSROOM · REPORTING FROM MARKETWATCH · 2 MIN
The Federal Reserve maintained interest rates on Wednesday, and the decision reaches voters through a familiar path: the financed car payment, the house payment and the credit card bill. According to MarketWatch, the cost of money is no longer a subject restricted to economists and has appeared as a topic in the elections.
According to the report, the problem is not in a single product. Vehicle financing, mortgage and credit card debt form a set of bills that weigh on the household budget and that voters feel every month, which explains why the issue is gaining strength now.
The expectation highlighted by the text is that interest rates should not fall anytime soon. For those who already carry these debts, this means that the cost of credit tends to remain high for longer, without a defined date for relief.
In the center-right view that guides this newspaper, the debate needs to start with the cause and not the symptom. Interest is the price of money, and trying to lower this price by decree usually takes its toll later, in inflation and distrust of the currency. Fiscal responsibility and central bank credibility are, in this reading, the safest path to lower interest rates on a lasting basis.
What is at stake is the relationship between voters and credit. When the cost of money becomes a campaign flag, the temptation for quick solutions grows, such as fee pricing and subsidies, with effects that tend to appear later in the credit offer. The material collected does not detail which proposals are on the table, and this report does not attribute any to the candidate.
What changes for the investor
For those who invest and operate, maintaining interest rates keeps the cost of capital at the center of the market reading, with a possible effect on more indebted companies and sectors that depend on consumer financing. This is an analysis of possible impact, not a price forecast or a suggestion to buy or sell. It is worth following the Fed's next decisions, inflation data and credit news, as these are the ones that will tell you whether the expectation of high interest rates for longer is confirmed.
Automatically translated from Portuguese.
