During a G20 side event, the future president of the BC emphasized that the Republican’s promises, such as closing the North American economy and combating immigration, are being closely monitored
During a G20 side event held in Rio de Janeiro, Gabriel Galípolo, who is about to assume the presidency of the Central Bank, shared his perceptions on the changes in economic expectations resulting from the election of Donald Trump in the United States. Galípolo highlighted that Trump’s victory brought a turnaround in forecasts of cuts in US interest rates. Initially, it was expected that there would be up to six interest rate reductions, but with the new administration, the forecast was adjusted to a maximum of two reductions. This phenomenon, which reflects changes in market expectations, was called “Trump Trade”.
Galípolo emphasized that Trump’s campaign promises, such as closing the US economy and combating immigration, are being closely monitored by economic analysts. Possible policies have already begun to be priced by financial markets. The BC’s director of monetary policy explained that the fight against immigration could result in an increase in the cost of labor in the United States, while higher import tariffs could lead to an increase in product prices.
The future central bank president stated that these expectations have already caused a rise in American interest rates, which in turn affects the global financial cost, since the interest charged by other countries is often based on American rates. The event in Rio de Janeiro is part of the preparations for the G20 summit, which is scheduled to take place next week at the Museum of Modern Art in Rio de Janeiro. The meeting will be attended by heads of state from the world’s main nations and is scheduled to take place on Monday and Tuesday.
