The market has more and more doubts about the movements that the US Federal Reserve (Fed) may carry out in the next monetary policy meetings. The organization hinted in its projections made in September that the price of money could be reduced by 50 more basis points before the end of the year in the two pending meetings. But investors are not so clear after the macroeconomic data that has been published.
Some of the big Wall Street bankers showed these doubts this Tuesday, at an event at the Future Investment Initiative from Saudi Arabia. Asked if they think there will be two more rate cuts this year, not a single executive on a panel that included the leaders of Goldman Sachs Group, Morgan Stanley, Standard Chartered, Carlyle Group, Apollo Global Management and State Street, raised the hand, according to Bloomberg. From the agency they explain that “most agreed there could be one more cut by the end of 2024“.
BlackRock CEO Larry Fink made similar comments Tuesday. “We have higher inflation in the world than we have ever seen,” he said. “We are not going to see interest rates as low as some people predict“, he considered.
Election week
The Next meeting will be held on November 6 and 7Wednesday and Thursday of next week, instead of the usual Tuesdays and Wednesdays on which the members of the Fed are always summoned, so the conclusions will not be made public until that Thursday. The reason is none other than the holding of the elections for the presidency of the United States on Tuesday, November 5.
The elections are also setting expectations for what the Fed can do in the coming months. “It is difficult to think about monetary policy” until “the elections pass and we have a clear idea of political actions“said David Solomon, CEO of Goldman Sachs at the event held this Tuesday.
“The business cycle will not change on November 6, the day after the US election. But the policy mix could take a different path, and financial markets will try to price it in. To some extent, it is possible that have already been doing so, with rate expectations and the dollar rising as polls have tilted in Trump’s favor, although strong recently released data likely explains most of the moves,” analysts at J. Safra Sarasin Sustainable AM in a report.
In September, 11 Fed members voted to lower rates to a range of 4.75% to 5%, after keeping them at their highest level in two decades for more than a year, undertaking the first cut in more of four years.
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