Rates cut!
The Fed a short while ago announced a 25 basis-point rate cut and signaled to investors that it sees only 1 more rate cut in 2026.
And if that wasn't enough, the decision on today’s cut was far from clear within the Fed. The central bank is literally split in two.
Today the central bank voted in a divided decision to lower its benchmark interest rate to a range of 3.5% to 3.75%. This is the third rate cut this year.
The president of the Federal Reserve Bank of Kansas City, Jeff Schmid, and the president of the Federal Reserve Bank of Chicago, Austan Goolsbee, dissented and preferred to keep rates unchanged. On the other hand, Fed governor Stephen Miran advocated for a half-percentage-point cut.
Decisions on future Fed policy will likely look different next year. They will depend on the newly elected chair of the central bank who will replace J. Powell.
Trump reportedly already has his pick. And given that the U.S. president wants to continue cutting rates, we could even see surprises in the form of multiple rate cuts.
I have mixed feelings about this and I don't know how things will develop from here. I noticed that stocks ended up falling sharply, but I don't know why.
Thanks for the overview👍. It’s not clear right now, but next year things could change and Trump will definitely push for cuts. When he has his own person in place, that would undermine the idea that the Fed should be politically neutral.