The US Federal Reserve (Fed) will hold its upcoming monetary policy meeting amidst an uncertain electoral climate. The 25-basis-point rate cut (bps) seems almost certain.
Hereafter, what we expect:
- Not surprisingly, a 25-basis-point rate cut from 4.75-5% to 4.5-4.75%. This cut is already almost totally priced in by markets.
- The outcome of the US Presidential election may be known but the Fed will likely remain cautious regarding the pace of future rate cuts.
- Since the decision to cut rates by 50 bps in September, economic data reflects a resilient economy.
- The Fed should also stress the impact of recent hurricanes and strikes on the latest employment data (as it did after Katrina or Sandy).
- The Fed’s message should not be very different from September’s except for mention of the hurricanes.
In summary, the outcome of the Federal Reserve meeting is widely expected. Markets have already priced in the rate cut and remain focused on the results of the US Presidential election.
This commentary is provided for information purposes only. The opinions expressed by the La Française group are based on current market conditions and are subject to change without notice. These opinions may differ from those of other investment professionals. Published by La Française Finance Services, head office located at 128 boulevard Raspail, 75006 Paris, France, a company regulated by the Autorité de Contrôle Prudentiel as an investment services provider, no. 18673 X, a subsidiary of La Française. Crédit Mutuel Asset Management: 4, rue Gaillon 75002 Paris is an asset management company approved by the Autorité des marchés financiers under n° GP 97 138. Public Limited Company (Société Anonyme) with share capital of €3,871,680, RCS Paris n° 388 555 021, Crédit Mutuel Asset Management is a subsidiary of Groupe La Française, the asset management holding company of Crédit Mutuel Alliance Fédérale.