The Federal Reserve is anticipated to conclude its meeting on Thursday with an additional interest rate reduction, as financial markets are strongly indicating.
The central bank’s Federal Open Market Committee is likely to implement a 0.25 percentage point cut to adjust its policy in response to a more intricate economic environment characterized by moderating inflation and weakening labor market conditions.
Beyond the imminent rate cut, the focus will shift towards the future plans of Chair Jerome Powell and the Fed, as they navigate the changing economic dynamics, alongside the political upheaval following Donald Trump’s presidential victory.
Powell is expected to maintain a stance of observing the newly incoming administration’s policies before making any significant adjustments based on the evolving economic landscape.
The current target range for the fed funds rate stands between 4.75%-5.0%, with market expectations leaning towards another rate cut in December, a likely pause in January, followed by multiple reductions through 2025.
Investors and analysts will be keenly observing the Fed’s statements for insights into the committee’s outlook and Powell’s guidance on future monetary policy decisions.
Markets will observe how Trump will act now when he is assuming the White House following the Fed’s jumbo rate cut in September when he had warned the central bank earlier not to shift rate policy before the election.
Before the cut, Trump said that he would let Powell finish his term if he is elected as the next president and if the Fed’s chair does the right thing, which is not cutting the rate. The market will closely watch the president-elect comment, especially after the monetary policy meeting today.
