Federal Reserve Interest Rate Cut Anticipation

The Federal Reserve is expected to cut interest rates by 25 basis points at the end of its policy meeting on Thursday, based on a survey of Investing.com readers on the social media platform X.

Survey Results

Out of 1,833 respondents:
– 63.3% anticipate a 25 bps cut
– 21.2% foresee no cut
– 15.5% predict a 50 bps cut

A rate cut would mark a second consecutive decrease, reflecting a continued slowdown in inflation pressures. In September, the Fed reduced its federal funds rate target range by 0.5 percentage points to 4.75% to 5% after maintaining steady rates for over a year.

Market Expectations

According to CME's FedWatch tool, traders currently estimate a 99.1% likelihood of a 25 bps cut.

Analyst Insights

In their November preview, analysts at Morgan Stanley expressed that robust growth and inflation nearing the target will likely lead to the anticipated cut. They commented on expectations for the Fed's assessment of the labor market, highlighting strength.

Bank of America noted that the October jobs report supports the case for a 25 bps cut. They stated, "Even accounting for hurricane and strike distortions, the October jobs report was soft enough to essentially seal the deal for a November cut, significantly increasing the odds for another 25 bps cut in December." They expect minimal changes to the FOMC statement, barring the language regarding the new target range.