FED Prepares For A New Rate Cut Amid Political Transition In The United States: 25 Basis Points Cut Is Expected


(MENAFN- Investor Ideas) Investorideas ( ), a go-to platform for big investing ideas releases market commentary from Quasar Elizundia, Expert Research Strategist at Pepperstone.

"The federal Reserve of the United States concludes its penultimate meeting of the year today, which was delayed due to the presidential elections in the country. This time, markets widely anticipate a rate cut, though of a smaller magnitude, set at 25 basis points compared to the more aggressive stance seen in September, when the Fed reduced by 50 basis points to counteract the perceived deterioration in the labor market at that time. Since then, data has been favorable, with a robust economy and a labor market maintaining an unemployment rate at 4.1% and solid consumption levels among American consumers.

One of the central topics of this meeting is how the Fed will adjust its monetary policy under Donald Trump's return to the presidency. Trump has been a constant critic of the central bank, and several of his proposed policies -such as new tariffs and tax cuts- could push inflation higher, complicating the Fed's goal to bring it to 2%. In this context, investors are watching cautiously, as the new political environment could affect the pace of future rate cuts.

Despite a growing expectation that the Fed may end its cutting cycle during the second half of next year, uncertainty prevails. With the potential for larger fiscal deficits and trade policies that alter capital flows, the Fed's path toward a more accommodative policy seems less clear.

Without new economic projections at this meeting, the Fed's statements today will be closely scrutinized as they may offer clues on how the institution will address the implications of a possible shift in U.S. economic policy direction."

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