“The election will not affect the Fed’s monetary policy adjustment tomorrow: we still expect a rate cut of 25 basis points,” comments Carl Weinberg of High Frequency Economics.
The American Central Bank (Fed) began its meeting on Wednesday, during which its officials are expected to lower rates again, a few hours after the announcement of the re-election of Donald Trump as head of the United States.
The meeting of the Monetary Policy Committee (FOMC) “started at 10:00 a.m. (3:00 p.m. GMT) as planned” on Wednesday, a Fed spokesperson told AFP.
The discussions, which are usually held on Tuesdays and Wednesdays, were postponed to Wednesday and Thursday due to the election, which saw the victory of Republican Donald Trump.
“The election will not affect the Fed’s monetary policy adjustment tomorrow: we still expect a rate cut of 25 basis points,” or a quarter of a percentage point, commented Carl Weinberg, chief economist for High Frequency Economics, in a note.
The Fed will publish its decision on Thursday at 2:00 p.m. (7:00 p.m. GMT) and its president, Jerome Powell, will hold a press conference 30 minutes later.
The Federal Reserve began in September, during its previous meeting, to lower its rates, which it had maintained since July 2023 at their highest level in more than 20 years, in order to bring down inflation.
For this first cut since March 2020, it opted for a reduction of half a percentage point, bringing rates to a range of 4.75 to 5.00%.
Washington recently published a slew of economic indicators, which showed a solid economy, but moving away from post-Covid euphoria.
Thus, GDP growth in the third quarter, although still almost twice as strong as that of the euro zone, disappointed, at 2.8% at an annualized rate, compared to 3% in the second quarter.
But it was from employment that the worst surprise came, with in October the lowest number of creations since December 2020 in the United States. This slowdown comes from the hurricanes that hit the country and several strikes, notably at Boeing.
Inflation has evolved in the right direction, falling in September to its lowest level since February 2021, at 2.1% over one year, according to the PCE index, favored by the Fed and published last Thursday.
The Fed, however, will not update its economic forecasts this week, which will be updated at the next meeting in December.
