France sold 129 tons of gold it held in the US Federal Reserve to buy new bars in Europe, realizing a profit of €12.8 billion.

The process began in July 2015 and concluded in January of this year. “Instead of refining and transporting the old gold from the United States, the institution decided to sell it and acquire new ingots that meet current international standards in the European market.”

Now, all gold reserves are located in Paris. The country currently holds some 2,437 tons of the precious metal, “considered the fourth largest in the world.” Of this total, “134 tons correspond to old ingots and coins that the Bank of France plans to modernize to meet current standards by 2028.”

The United States leads the ranking of gold reserves, with approximately 8,133 tons. Germany is in second place, with around 3,360 tons of gold, and Italy is in third place, with reserves of 2,452 tons.

M.Pino

Source: actualidad.rt

(Reference image source: Andrej Sachov on Unsplash)

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Last Wednesday, the US Federal Reserve finally implemented a quarter-point reduction in interest rates, setting them between 4 % and 4.25 %.

In a climate of uncertainty, the Fed made the announcement after a lengthy meeting of its Federal Open Market Committee (FOMC).

A weaker labor market has been a key factor in this process, with President Donald Trump’s pressure on Jerome Powell continuing unabated in recent weeks.

There was only one dissenting vote, cast by the new Fed governor, Stephen Miran, whose appointment was pushed by President Trump himself. The official called for a larger rate cut.

“The Federal Reserve usually keeps interest rates high to control inflation sustainably. But this time, concerns about employment prevailed, even though inflation remains above 2%.”

M.Pino

Source: DW

(Reference image source: Anne Nygård on Unsplash)

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The decisions of the US Federal Reserve (Fed) exert a direct influence on the monetary sector of Latin American countries.

If the organization maintains or lowers interest rates, Latin American stock markets react in different ways, but always affecting investments, imports, exchange rates, among other financial repercussions.

Like a domino effect, this influence of the Fed’s decisions in Latin American countries directly affects the daily lives of millions of people.

Specifically, “when the Fed decides to raise its interest rates, the cost of money in the United States becomes more expensive. This has an immediate impact on the flow of capital globally.” Investors typically turn to repatriating their funds to the U.S. as a way to increase returns and reduce risks. For Latin America, as “money leaves the region, local governments and companies have more difficulty obtaining financing.”

On the other hand, pressure on exchange rates is reflected in the devaluation of Latin American currencies. Consequently, the phenomenon “makes imports more expensive, from consumer products to essential inputs for industry,” which translates into increased inflation due to the rise in the prices of imported goods.

Regarding domestic growth, in Latin America it is slowed by the rising cost of credit. “Private investment, a key driver of growth, is contracting. Infrastructure projects, technological innovation, and the creation of new companies are slowing, affecting job creation.”

Consumption is also affected, since the devaluation of the local currency and rising prices reduce household purchasing power. Households are limiting spending, which impacts domestic demand, an essential component of GDP growth.

M.Pino

Source: cointelegraph

(Reference image source: José Casado on Unsplash)

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Jerome Powell, president of the United States Federal Reserve, Fed, declared this Monday, July 15, that the organization will cut interest rates before inflation in the country reaches 2 %.

Powell stressed that the agency seeks “confidence that inflation moves sustainably towards that level to make its policy more flexible.”

The president of the Fed made this point clear during an interview with David Rubenstein at the Economic Club of Washington, where he added that the inflation data for the second quarter of 2024 has “added confidence about price control”, after a certain progress between January and March.

However, the official did not provide information on a specific date for the start of monetary flexibility. In this regard, he emphasized that meetings will continue to analyze inflation data and the risk balance forecast.

What Powell did assure is that “after the fall in inflation in recent months, the organization will focus more on its dual mandate, which includes, in addition to price stability,” the search for “maximum sustainable employment in the country.”

M.Pino

Source: bolsamania

(Reference image source: engin akyurt in Unsplash)

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