Will the Fed and ECB meetings in October really be non-events?
|The unexpected element lies in the (highly likely) lack of surprises. The suspense surrounding the outcome of the FOMC meeting on 28-29 October and the ECB meeting on 30 October is, in reality, quite limited: a further 25 bp cut by the Fed and a continuation of the stance for the ECB are expected. In doing so, by narrowing the gap between policy rates and the extent of restriction in US monetary policy, the Fed's stance is aligning more closely with that of the ECB rather than moving away from it. Such a simultaneous lack of suspense for both central banks is uncommon, especially given the overall economic environment, which remains fraught with uncertainty.
The uncertainty surrounding the monetary policies of the Fed and the ECB is not associated with their forthcoming meetings, for which their communications offer considerable clarity, but rather with the subsequent meetings and the following questions:
How many rate cuts in total will the Fed implement, and at what speed?
How long will the ECB uphold its current rate levels?
What are the potential risks linked to these scenarios?
The focus of interest in the October meetings will be less on the decisions made than on the tone of the statements and the press conferences, as well as what they indicate about future actions. Even with the high degree of certainty regarding the outcomes of the October meetings, certain questions remain pertinent, in particular the following: is the Fed right to cut rates and the ECB right not to cut them further?
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