Danger
Luc Aben, chief economist at Private Bank van Lanschot Kempen, Warns that the financial markets may go too fast if they expect three interest rates this year. Although the inflation figures of July, 0.2 percent rise month-on-month compared, and the absence of any gear in the goods inflation is good “is it too early to conclude that the interest should be drastically reduced,” says Aben.
For example, core inflation in the service sector, which is 80 percent of the US economy, increased by 0.4 percent. In addition to the strong labor market, this does not justify a hefty fall in interest.
Aben doubts whether the FED boss Powell will be more flexible during the Jackson Hole meeting. Why? The FED never takes volatile energy prices into account and concentrates on the wide, underlying price pressure. In addition, a too early interest rate can undermine the trust of investors, according to Aben. The result could “be an increase in long interest rates.”