Notes From The Desk: FOMC – The Results Are In
The Americans had one unanimous vote this week, with all members of the Federal Reserve Committee agreeing to deliver a 25 bps cut, reducing the target range for the Fed Funds Rate to 4.5-4.75%.
As this was widely expected, the market focused on the accompanying statement and Chairman Powell’s press conference.
Reading the tea leaves.
- The Fed remains on a path to a more neutral stance (i.e., lowering the policy rate). Thus, the direction is known, but the pace and destination are data-dependent (i.e., unknown).
- Regarding Trump’s fiscal policy, they are taking a ‘wait and see’ approach and are not factoring this into their decision-making for now.
- Nothing in the economic data suggests the Fed needs to move quickly.
We believe the Fed remains poised to deliver another 25 bps cut in December. Yields have reacted by moving 5-10 bps lower.
