The announcement from Fed Chair Kevin Warsh that the key interest rate will be left unchanged at 3.5-3.75 percent goes down well with Bergqvist.
If it had been a surprise, it would have been unfortunate. But the door is open in mid-September for the interest rate to be raised and then you also have access to new forecasts. Then you might have a better basis for decision-making.
What is clear after the press conference Warsh held is that we now see a Fed chief who is in the process of renewing monetary policy.
Want to sit in the back seat
Warsh is passionate about trying to change the central bank. It's about communication, balance sheet, data collection, AI and the framework around the inflation target. We don't know where it will land, we may see a little more at the end of the year when the working groups he appointed start delivering. But monetary policy must be modernized, says Bergqvist.
The second conclusion that can clearly be drawn, according to him, is that the Fed chief is taking a step back and seeking information from the market.
He doesn't want to sit behind the wheel and point out which direction we should go, but rather sit in the back seat and observe what happens. But the world is colored by unpredictability today and I would like to have a central bank that can help and point out which direction we are moving.
Pressure from Trump
US President Donald Trump has been pushing for an interest rate cut and the American people are pressured by inflation and high consumer prices.
The question is how they will take this, says Robert Bergqvist.
The Swedish Riksbank will announce its interest rate decision in three weeks.
If the Fed had surprised, the pressure would have increased on the Swedish Central Bank. Then I also believe that the Swedish Central Bank will follow the working groups with great interest, considering that the Fed is the world's most important central bank.
