Rate Reduction Expected, Yet Powell's Conference May Hinder Further Easing
- The U.S. Federal Reserve plans a 25-basis-point rate cut to 3.75-4.00%, driven by weak labor data and delayed economic reports from the government shutdown. - Markets expect the cut (98.3% probability) but watch for "hawkish surprises" in Powell's presser about future easing pace and inflation risks. - Global markets react: BoE faces 68% December cut odds, while ECB and BOJ decisions could reshape cross-asset flows this week. - Uncertainty lingers over QT timeline and Powell's rhetoric, which could sway
The U.S. Federal Reserve is expected to reduce interest rates by 25 basis points during its upcoming two-day meeting, bringing the federal funds rate down to a range of 3.75-4.00%, as outlined in a
This move by the Fed follows softer inflation readings and continued weakness in employment, with private sector data such as the ADP and ISM reports underscoring ongoing labor market challenges, as mentioned in the MarketScreener preview. Experts from Allianz Research and
Traders are almost certain a rate cut will happen this week, with the CME FedWatch tool indicating a 98.3% chance, according to
The upcoming press conference is expected to be crucial, with Powell likely to discuss the trade-off between inflation and employment risks. Recent remarks from former Fed officials like Loretta Mester indicate that the central bank remains wary of inflation rising, despite the current trend toward rate reductions, as noted by the Manila Times. At the same time, ongoing U.S.-China trade negotiations and the broader international economic climate add further complexity, with tensions and tariffs between the two countries influencing investor sentiment, according to Yahoo Finance.
Investors will be closely monitoring the Fed’s outlook for future monetary policy. While markets are currently expecting two more rate cuts in 2025 and as many as three in 2026, a
The Fed’s actions are also expected to impact global financial markets. The Bank of England (BoE) is facing growing expectations for a rate cut, with traders assigning a 68% likelihood to a move in December, according to
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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