According to ChainCatcher news, analyst Megan Leonhardt stated that although no progress was made in curbing inflation in November, federal funds futures show that there is almost a 100% chance that Federal Reserve policymakers will cut the benchmark interest rate by another 25 basis points.The rationale for the rate cut may depend on Federal Reserve officials wanting to keep the benchmark rate in line with the current economic conditions, as inflation has fallen significantly from its 2022 peak, and the previously tight labor market is normalizing.
However, if the rate cut next week is accompanied by forward guidance from Powell, hinting that the Federal Reserve will seek to pause rate cuts at the start of the year, it should not come as a surprise. The Federal Reserve not only needs to control inflation in the final stages, but the outcomes of many fiscal policies over the next year may also change the trajectory of inflation. Additionally, there are some signs of weakness in the labor market that are worth closely monitoring. All of this presents directional challenges for the Federal Reserve in the coming months, and policymakers may avoid taking action at a surprising pace.
