As things stand, traders are more or less pricing in two more rate cuts by the Fed by year-end. The first one will be today before another in December. However, don’t expect Powell to be explicit about that in his press conference today. He won’t pre-commit to anything and in the absence of key US economic data, there’s no reason for him to tease another rate cut for December.
That might yet dent market hopes of a continued dovish tilt from this meeting. But still, it doesn’t mean that they won’t be cutting in December. In reading the tea leaves, odds are they still will so long as data trends continue as they are and it seems to be the case for the most part. If the Fed thinks otherwise, then Powell has to really push back against market pricing today or risk being bullied once more.
Here are analyst calls on the Fed ahead of the meeting today:
JP Morgan- “The case for expecting a cut this week is a simple one: Fed speakers, even some of the more
hawkish ones, have done little to push back on the market’s firmly held view that a cut is coming.”- Miran set to dissent in favour of a 50 bps rate cut- “Powell will continue to characterise the easing as a risk management move
