Fed Rate Cut Expected, Market Focus Shifts to Policy Guidance

Traders and economists confidently expect the Fed to reduce interest rates by 25bps to the 4.25-4.50% range. The Summary of Economic Projections and any Powell comments about a prolonged “pause” to the interest rate cutting cycle will be the potential market moving releases. EUR/USD has carved out a narrow range between 1.0470 and 1.0600 and unless the Fed delivers a meaningful surprise of some sort, that range may carry over.

With a 25bps interest rate cut essentially fully discounted, this aspect of the FOMC meeting will not be a significant market mover in and of itself; instead, traders will key in on the central bank’s monetary policy statement, Summary of Economic Projections (including the infamous “dot plot” of interest rate expectations), and Fed Chairman Powell press conference.The biggest question traders will be asking is whether the Fed will maintain the pause in January (~80%+ per CME FedWatch), or if they will make a move in March (~40% implied probability). One big uncertainty for Jerome Powell and company is the potential changes that Donald Trump’s second term will bring. Specifically, the potential for expansionary fiscal policy from an extension of the tax cuts, easier regulation, protectionist trade policy, and reduced immigration could all impact inflation and the jobs market, and by extension, Fed policy in the years to come. At the margin, this uncertainty may push the committee to be more cautious with future decisions until the proverbial “lay of the land” is better understood, and it could lead to a slower reduction in interest rates to avoid a potential acceleration of inflation. Another key aspect of the meeting to monitor will be the FOMC’s Summary of Economic Projections (SEP

Business Business Latest News, Business Business Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

Fed Rate Cut Expected, But Hawkish Tone May Trigger Market VolatilityThe Federal Reserve is widely anticipated to cut interest rates by 0.25 percentage points on Wednesday. Investors will closely watch the Fed's statement and Chair Jerome Powell's press conference for clues about future monetary policy. Analysts predict a hawkish tone, potentially leading to market volatility.
Source: NBCDFW - 🏆 288. / 63 Read more »

Fed Rate Cut Expected, Honda-Nissan Merger Rumors Stir MarketsInvestors anticipate the Federal Reserve's third consecutive rate cut, focusing on economic projections and Chair Jerome Powell's comments for insights into future rate actions. Meanwhile, rumors of a possible merger between Honda and Nissan are adding volatility to the market. The Dow Jones Industrial Average continued its decline, and oil prices fluctuated as traders await the Fed's decision and consider the impact of new sanctions on Russia's energy exports.
Source: Investingcom - 🏆 450. / 53 Read more »