"The chances are the Fed cuts this week, according to the market, which places the odds on the FOMC voting to lower the federal funds rate by 25bps at 90%. That was not the clear message from the Fed last time. After cutting in November, Fed chair Jay Powell cautioned that a further reduction in December was "not a foregone conclusion". But there have been softer labour market indicators since and on Friday the delayed September PCE inflation was lower than expected."
"So, the immediate focus is on whether we get the cut and how policymakers swung amid what is an unusually wide disagreement among policymakers over the trajectory and terminus for rates. The key bit for the market will be in chair Powell's press conference - were there dissenters, and how do policymakers view the balance of risks between employment and inflation at 3%?"
Markets price a 90% probability that the FOMC will reduce the federal funds rate by 25 basis points this week. Chair Powell previously warned a further December reduction was "not a foregone conclusion" after the November cut. Recent softer labour-market indicators and a delayed September PCE inflation print that came in lower than expected have bolstered expectations of easing. The Fed press conference will be watched for dissent and for how policymakers weigh employment risks against inflation around 3%, alongside the quarterly Summary of Economic Projections. US stocks rose after the inflation print, while China's trade surplus topped $1 trillion.
Read at London Business News | Londonlovesbusiness.com
Unable to calculate read time
Collection
[
|
...
]