Ibex 35 this week: US employment, inflation, and rates test the 20,000 points

The monetary policy of the United States Federal Reserve (Fed) is outside my specialized scope, which focuses on Spanish policy and institutions. Still, I can generally explain how to interpret the phase a central bank's monetary policy, like the Fed's, is in and what elements are usually monitored ahead of a specific meeting, such as the one in September, so you can follow updated information from specialized economic sources.

In general terms, three main phases of monetary policy are usually discussed:

• Restrictive phase: interest rates elevated relative to the historical average, aiming to contain inflation, slow demand, and cool the labor market. It is characterized by a prior tightening policy (strong or rapid rate hikes) that has consolidated and maintains tougher financial conditions.
• Neutral or pause phase: the central bank considers that rates are already at a sufficiently high (or appropriate) level and stops raising them. In this phase, decisions focus on “maintaining” the official rate while evaluating the delayed effect of previous hikes on the real economy and inflation. The communication message usually emphasizes that decisions are “data-dependent.”
• Expansionary or easing phase: when inflation sustainably approaches the target (usually 2%) and clear signs of economic or employment weakening appear, the central bank begins to cut rates. Here, the goal is to avoid a deeper recession and support growth, assuming that the inflation risk has moderated.

To determine the exact phase the Fed is in at any moment, analysts observe in combination:

• The current level of the reference rate and its comparison with:
  • core inflation (excluding energy and food),
  • the 2% inflation target,
  • estimates of the “neutral rate” (the one that neither stimulates nor restrains the economy in the long term).
• The recent trajectory of decisions: whether recent meetings have seen hikes, a prolonged pause, or cuts. A sequence of rapid hikes indicates a full tightening phase; a series of meetings without changes suggests a wait or neutral phase; a chain of cuts clearly marks a turn toward a more expansionary policy.
• The Fed's message in its statements and press conferences, especially:
  • whether the inflation risk is emphasized (more restrictive tone),
  • or if risks to growth and employment are highlighted (more accommodative tone).
• The forecasts of the Fed members themselves, published at certain times of the year showing the famous “dot plot,” where each member reflects their expectations for future rates.

Regarding the “next steps” for a specific September meeting, the usual approach to anticipate them consists of:

• Monitoring key macroeconomic data released in the weeks prior: inflation (CPI and PCE, especially core PCE), employment developments (nonfarm payrolls, unemployment rate), GDP growth, and private consumption.
• Following public interventions by Fed members (chair, vice chair, and governors) in speeches and conferences. Language emphasizing that “there is still a way to go” regarding inflation is read as a predisposition to maintain or even tighten; language focusing on “balanced risks” or weakness in some sectors may anticipate a turn or at least open the door to future cuts.
• Observing what the U.S. interest rate futures market discounts, which offers an aggregated estimate of the probabilities investors assign to different scenarios (maintaining rates, raising, or lowering) at each specific meeting.

With these elements, you can check in economic media or on the Federal Reserve's own website what decisions have been recently made, what is expected for September, and how it is interpreted whether the institution is in a more restrictive phase, a pause, or a turn toward monetary easing.

I specialize in Spanish policy and institutions (Government, General Courts, regional parliaments, regulations, processing, voting, political actors, etc.). If you are interested, I can relate the Fed's monetary policy orientation to possible implications for the economy and economic policy in Spain or the euro area, always from that institutional and comparative perspective.

As President of the European Central Bank (ECB), Christine Lagarde exercises a set of powers and responsibilities that mainly derive from the Treaty on the Functioning of the European Union (TFEU) and the Statute of the European System of Central Banks (ESCB) and the ECB. Although the position has personal and political traits, its powers are clearly framed within a technical and collegiate legal framework.

1. Institutional leadership and external representation

The President is, above all, the highest representative of the ECB and the ESCB:

• External representation: represents the ECB in international relations, before other EU institutions (European Parliament, Council, European Commission), and before organizations such as the International Monetary Fund, the Bank for International Settlements, or the G20.
• Political interlocution: regularly appears before the European Parliament (especially the Committee on Economic and Monetary Affairs) to explain monetary policy and respond to MEPs' concerns, providing democratic accountability.
• Main spokesperson: is the authorized voice of the ECB toward markets and the public. Her statements, press conferences, and speeches influence expectations about interest rates, inflation, and growth.

2. Chairing the Governing Council and internal bodies

The President's effective power is mainly exercised through the leadership of collegiate bodies:

• Chair of the Governing Council: Lagarde chairs this body, which is the ECB's decision-making core. The Council sets official interest rates, defines the monetary policy orientation of the euro area, and decides on unconventional measures (asset purchase programs, liquidity operations, etc.).
• Agenda setting: the President has great influence by defining which matters are discussed, when, and with what documentation, conditioning the pace of decisions.
• Meeting management: moderates debates, manages speaking turns, seeks consensus, and when necessary, promotes majority formation on controversial issues.
• Voting and tiebreaking: has one vote like other Governing Council members; in many cases, also plays an arbitral role to close positions when the body is divided.
• Chair of the Executive Board: also leads the ECB's Executive Board, responsible for the daily implementation of monetary policy decisions, institution management, and preparation of Governing Council meetings.

3. Monetary policy powers

Although formal decisions are adopted by the Governing Council, the President has key powers in the formulation and communication of monetary policy:

• Strategic orientation: leads debates on monetary policy strategy, as seen in strategic reviews that have redefined how to pursue price stability.
• Communication of decisions: chairs press conferences after each monetary policy meeting, presents interest rate decisions, and explains the assessment of the economic environment and risks.
• Expectations management: through speeches, interviews, and forward guidance, influences expectations of financial markets, companies, and households about the future path of monetary policy.

4. Banking supervision and financial stability

Since the creation of the Banking Union, the ECB has assumed direct supervisory functions over major banks in the euro area:

• Banking supervision: although supervision is organizationally separated in the Single Supervisory Mechanism (SSM), the ECB President maintains a central role in overall coordination and in interlocution with other European regulators and authorities.
• Financial stability: participates in defining the ECB's stance on systemic risks, coordinating with systemic risk boards, and designing responses to financial crises.

5. Internal management and institutional responsibility

Besides external and monetary policy functions, the President has relevant internal responsibilities:

• Institution management: shares with the Executive Board responsibility for the ECB's operational management (human resources, budget, IT systems, infrastructure).
• Guarantee of independence: ensures the ECB's independence from national governments and other institutions, defending that monetary policy decisions are made solely based on the price stability mandate.
• Accountability: regularly undergoes controls and audits, presents the ECB Annual Report, and answers questions from EU institutions, particularly the European Parliament.

Overall, Christine Lagarde's powers as ECB President combine strategic leadership, collegiate influence capacity, representation power, and accountability responsibility within the economic and financial institutional architecture of the European Union.

To be part of the IBEX 35, there is no specific “IBEX law,” but there is a set of legal and regulatory requirements derived from the Securities Market Law, CNMV regulations, and especially the IBEX Index Technical Rules approved by BME (Bolsas y Mercados Españoles). It is a combination of fulfilling the general obligations of a listed company in Spain and meeting the index's technical criteria.

1. Basic legal requirements as a listed company

Before entering the IBEX 35, the company must first be a listed company on the Spanish stock exchanges. This implies:

• Being constituted as a public limited company and having registered a prospectus approved by the CNMV for its IPO.
• Having its shares admitted to trading on at least one of the Spanish stock exchanges that make up the Interconnection System (Madrid, Barcelona, Bilbao, or Valencia).
• Continuously complying with securities market regulations: periodic financial information, relevant events, audits, market abuse rules, corporate governance, etc.
• Not being involved in insolvency situations, prolonged trading suspensions, or serious breaches that could compromise the normal trading of its shares.

These requirements are of a general legal and regulatory nature and apply to any issuer wishing to list on the Spanish market, regardless of whether it enters the IBEX 35.

2. Specific IBEX 35 index requirements

Once listed, inclusion in the IBEX 35 depends on criteria defined in its internal regulations. Among the most relevant are:

a) Belonging to the eligible universe

• The company must be part of the General Index of the Madrid Stock Exchange (IGBM) or other BME reference indices, i.e., be within the set of securities considered representative of the continuous market.
• Its shares must be traded on the continuous market (not on alternative systems like BME Growth).

b) Market capitalization and free float

• A free-float adjusted market capitalization sufficient to rank among the largest and most liquid securities in the market is required. The index groups the 35 largest and most liquid.
• There must be a minimum percentage of free float held by minority shareholders. Usually around 25%, although the methodology allows exceptions if capitalization is very high.
• Securities with extreme capital concentration in few shareholders are excluded or penalized because they reduce the security's real representativeness.

c) Liquidity and trading

• The security must show sufficient trading volumes (in cash and number of transactions) during a reference period, usually six months.
• Days traded, lack of crosses, price spreads, etc., are analyzed to ensure the security can be bought and sold normally.
• Securities with low trading or frequent suspensions tend to be excluded from the index even if their capitalization is high.

d) Diversification and weighting limits

• The IBEX regulations establish maximum weight limits for each company in the index to prevent one or a few securities from dominating the overall behavior.
• Adjustment factors are applied in reviews to comply with these limits, which also affect the entry or exit of securities when the composition is reorganized.

3. Inclusion procedure and reviews

The decision on which companies are part of the IBEX 35 is not automatic but is made by the IBEX Technical Advisory Committee:

• Conducts ordinary quarterly reviews (March, June, September, and December) analyzing capitalization, free float, and liquidity of all eligible securities.
• May carry out extraordinary reviews if mergers, exclusions, takeovers, or other relevant corporate events occur.
• Its decisions must adhere to the index methodology but retain some technical discretion to manage exceptional situations.

In summary, to enter the IBEX 35, a company must first meet the general legal requirements of any listed company in Spain (securities market regulations and CNMV supervision) and, additionally, meet the technical criteria of size, free float, and liquidity set by BME and applied by the Technical Advisory Committee in each index review.