After slashing rates last week, Fed Chair Jerome Powell worked hard not to offer forward guidance on where rates could go from here, keeping his options open for the December meeting and beyond. He stressed that officials can take their time to lower rates because the US economy is strong. He also said that policy is still restrictive, even after the November cut, and that policymakers are in the process of bringing rates to neutral levels.
With inflation still stubbornly above the Fed’s 2 per cent goal, the Fed may have only one rate cut left in December before taking a pause, according to Skyler Weinand at Regan Capital.
“The incredible move in the stock market post-election has effectively eased financial conditions,” he said. “This easing, combined with incoming fiscal stimulus, may warrant a pause on rate cuts by the Fed in the near future to allow the dust to settle and to process more incoming data.”
Ellen Zentner at Morgan Stanley Wealth Management said markets were already weighing the possibility that the Fed will cut fewer times in 2025 than previously thought, and that they may hit the pause button as early as January.
However, according to David Russell at TradeStation, “it’s time to stop worrying about the Fed and inflation. Stocks have been on autopilot since the election and today’s numbers do nothing to hurt the trend. December is still in play for a cut.”
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In cryptocurrencies, the rally continued. Bitcoin traded at $US90,858 as of 6.34am AEDT, having earlier reached a record of $US93,462. The digital asset is up more than 35 per cent in the wake of Trump’s November 5 election victory.
Trump has pledged to create a friendly regulatory framework for crypto, set up a strategic bitcoin stockpile and make the US the global hub for the industry. A onetime crypto sceptic, Trump reversed course after digital-asset companies spent heavily during election campaigning to promote their interests.
with Bloomberg
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