Powell on the Fed’s Interest Rate Cut: December Predictions
On November 7, the Fed announced a 25 basis point cut in the interest rate, bringing it to a range of 4.5-4.75%, aligning with market expectations. This move marks the second consecutive reduction in 2024 following a period of sustained high rates.
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On November 7, the Fed announced a 25 basis point cut in the interest rate, bringing it to a range of 4.5-4.75%, aligning with market expectations. This move marks the second consecutive reduction in 2024 following a period of sustained high rates.
On the day of the interest rate announcement, US Federal Reserve Chair Jerome Powell spoke at a press conference, shedding light on current monetary policy. The main question was whether the Committee’s stance would be affected by Donald Trump’s presidential victory.
Jerome Powell, Federal Reserve Chair at the November press conference. Source: Federal Reserve YouTube Channel.
Addressing the press, Powell made it clear he would not resign if Trump requested it, citing legal protections against demotion. He also assured that election results would not alter the Fed’s immediate policy path, easing worries about unexpected decisions.
These statements followed JPMorgan’s Global Strategy Chief David Kelly’s comments suggesting that a Trump victory might lead the Fed to pause rate cuts in December.
According to the latest press release, significant progress has been made toward the Committee’s 2% target, but inflation continues to be moderately elevated. The Fed is committed to achieving a balance between unemployment and inflation. The Committee noted that it will factor in a wide range of data, from inflation expectations to financial and international events.
The upcoming Federal Reserve interest rate meeting is scheduled for December 18. At the time of writing, the CME tool shows a 71.3% probability of a 25-basis-point rate reduction. However, these statistics are fluid and subject to change.
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