Rate cut now, but what about 2025? Investors await Fed Chair Jerome Powell and his colleagues with angst. The dot plot, statement and press conference may stir markets in different directions. Live coverage.
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Fed dot plot key to initial move, Powell may turn things around
Inflation is falling, but the pace has left many uneasy lately – the core Consumer Price Index (core CPI) is still above 3%. Price rises continue at an accelerated rate for a good reason, namely a strong economy and a resilient jobs market.
While current figures justify another a third consecutive rate cut by the Federal Reserve (Fed), officials will likely signal a slower path of reductions to borrowing costs next year.
The key to the initial reaction lies with the bank's Summary of Economic Projects –also known as the "dot plot." Projections for inflation, unemployment, growth and most importantly interest rates are critical. That is where hawks may show their claws. Investors fear the Fed will signal only two rate cuts in 2025.
Fed Chair Jerome Powell's press conference may prove different. The world's most powerful central banker could ease fears and leave a wide door open to more cuts. All in all, the last Fed decision of 2024 is a complex – and highly volatile event.
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