Election Has No Effect on Fed Policy Now, But Possibly Later
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Navigating Washington: Insights for Business

Global Economy Briefs

Timely insights from the Economy, Strategy & Finance Center

The Fed cut interest rates by 25bp and maintained the pace of balance sheet reduction (i.e., Quantitative Tightening) at the November 6-7 FOMC meeting. The federal funds target range was lowered by a quarter percentage point to 4.50-4.75 percent. Another 25bp cut in December is likely in our view, but the path for rates in 2025 and beyond is now less certain following the US elections.

Election Has No Effect on Fed Policy Now, But Possibly Later

November 07, 2024

The Fed cut interest rates by 25bp and maintained the pace of balance sheet reduction (i.e., Quantitative Tightening) at the November 6-7 FOMC meeting. The federal funds target range was lowered by a quarter percentage point to 4.50-4.75 percent. Another 25bp cut in December is likely in our view, but the path for rates in 2025 and beyond is now less certain following the US elections.

Trusted Insights for What’s Ahead®

  • As we expected, the Fed cut interest rates by 25bp in November, given what appears to be a sweet spot for the US economy.
  • Inflation is heading back to target, the labor market is “solid,” and real GDP growth has surprised to the upside in the Fed’s view.
  • The Fed Chair stated that US election results will have no impact on monetary policy in the near term, likely as the new administration will come into place in 2025.
  • The Chair also said that the Fed will not proactively alter the path of monetary policy to account for proposed changes in fiscal policies on the campaign trail.
  • Regarding the outlook for interest rates, the Fed Chair stated that the base case remain

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