La Française: Fed decision post-election

La Française: Fed decision post-election

November 5, 2024

Interest Rates Fed
Federal Reserve Washington.png

The US Federal Reserve (Fed) will hold its upcoming monetary policy meeting amidst an uncertain electoral climate. The 25-basis-point rate cut (bps) seems almost certain.

What we expect:

  • Not surprisingly, a 25-basis-point rate cut from 4.75-5% to 4.5-4.75%. This cut is already almost totally priced in by markets.
  • The outcome of the US Presidential election may be known but the Fed will likely remain cautious regarding the pace of future rate cuts. 
  • Since the decision to cut rates by 50 bps in September, economic data reflects a resilient economy.
  • The Fed should also stress the impact of recent hurricanes and strikes on the latest employment data (as it did after Katrina or Sandy).
  • The Fed’s message should not be very different from September’s except for mention of the hurricanes.

In summary, the outcome of the Federal Reserve meeting is widely expected. Markets have already priced in the rate cut and remain focused on the results of the US Presidential election.

Related posts