The Federal Reserve is expected to conclude its meeting on Thursday with another interest rate cut, focusing on recalibrating policy for an economy experiencing moderated inflation and a softening labor market. The central bank’s Federal Open Market Committee is likely to lower its benchmark borrowing cost by a quarter percentage point. The attention will then shift to Chair Jerome Powell and his colleagues as they navigate a changing economy and the aftermath of Donald Trump’s presidential victory.
Powell is anticipated to maintain stability and refrain from making early judgments on the election’s implications for the economy and rates. The Fed will take the necessary time to assess the new administration’s plans before refining its policies accordingly. Market expectations suggest another quarter-point cut in December, followed by a pause in January and multiple reductions through 2025.
Trump’s proposed economic measures, such as tax cuts and tariffs, could significantly impact the Fed’s policy adjustments. The potential for future rate cuts and inflation concerns will likely be addressed in Powell’s post-meeting news conference. The Fed’s balance sheet reduction efforts, alongside rate cuts, are also under scrutiny, with expectations for adjustments to the pace of run-offs in the coming meetings.
