Fed plans to announce dot plots, etc. at FOMC meeting
“Interest rate cut, likely in the second half of next year”
Market Watch reported on the 10th (local time) that there is speculation that the U.S. Federal Reserve System (Fed) will not meet market expectations for an interest rate cut next year after the December Federal Open Market Committee (FOMC) meeting held this week.
The Federal Reserve will hold the FOMC meeting in the early morning of the 14th (Korean time) and announce the Summary of Economic Outlook (SEP) for December, which includes the interest rate decision, dot plot, growth rate, inflation, and unemployment rate forecasts.
The most noteworthy part is the timing of next year’s interest rate cut, which will be included in the dot plot. The market believes that because inflation has recently been slowing, there is a possibility that interest rates will be lowered as early as March of next year.
However, Market Watch explained that such market expectations may collapse, which could put the year-end rally at risk. He added that although the Federal Reserve is expected to freeze interest rates, there is a significant possibility that the market will become unstable as it awaits remarks from Federal Reserve Chairman Jerome Powell.
Alex McGrath, chief investment officer at investment advisory firm NorthEnd Private Wealth, said the recent rebound in the stock and bond markets was largely due to expectations of a Federal Reserve interest rate cut next year, adding, “This is a report that could lead to a change in the Federal Reserve’s monetary policy. “It’s not visible,” he said.
“I was a little skeptical about the market excitement about a rate cut early next year,” said Ed Clissold, U.S. strategist at investment research firm Ned Davis Research, adding that it would take a gradual process for the Federal Reserve to move away from its tight monetary policy. He added that it is highly likely that the Federal Reserve will discuss lowering interest rates after changing its stance from a hawkish stance to a neutral one.
“The market is too aggressive to think that there will be a rate cut in March,” said Mike Sanders, head of fixed income at asset management firm Madison Investments, noting that it is more likely that the Federal Reserve will start cutting rates in the second half of next year.
He added, “Service inflation is becoming more rigid due to the continued strength of the labor market,” and “I see no way to solve this right now.”
Previously, the U.S. Department of Labor announced on the 8th that non-farm employment in the United States increased by 199,000 in November. This is more than the 190,000 increase expected by experts, and the increase is larger compared to the previous month’s figure of 150,000.
“(The Fed) will do everything it can to suppress talk of interest rate cuts,” Sanders said.
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.