Monetary policy

Analysts are unsure what the Federal Open Market Committee will do with monetary policy in 2025. The panel projects two rate cuts, but some analysts expect more, and others see fewer.

A week ahead of inauguration day, Scott Colbert, executive vice president, director of fixed income and chief economist at Commerce Trust, takes a look at how the Federal Reserve and the economy will fare in President-elect Donald Trump's second run in the White House.

Analysts are confident the Fed will lower rates at this week's meeting, but their views on what next year holds don't share the same consensus.

The Federal Reserve chair is not concerned about President-elect Trump nominating his successor well in advance of the end of his term in 2026, saying he is "confident" he will have a productive relationship with the next Treasury Secretary.

Federal Reserve Gov. Christopher Waller, a Trump appointee, said that while recent inflation readings are concerning, monetary policy would remain restrictive even if the central bank cuts interest rates by another quarter-point this month.

Donald Trump discussed various items related to the Fed and its independence and stated he would not nominate Jerome Powell for another term as chair. Gennadiy Goldberg, head of U.S. rates strategy at TD Securities, discusses what a Trump presidency may mean for the Fed.

The Federal Reserve chair said there are no economic indicators calling for rapid rate cuts. He also addressed Fed independence, the impact of Trump's economic agenda and more.

In a speech, Federal Reserve Gov. Adriana Kugler said sound monetary policy comes when electoral politics are kept out of central banking.

The impact of both presidential candidates' fiscal promises around taxation and spending could have dramatic effects on the Federal Reserve's outlook for monetary policy, which has become more aggressive toward rooting out inflation.

While this meeting is a slam dunk, the election and data makes the December meeting more of a question, some analysts said.

The Federal Reserve began cutting rates in September. The December meeting is its last of 2024. Will the cutting continue, or will there be a pause? Doug Peta, Chief Strategist, U.S. Investment Strategy, at BCA Research, discusses the meeting and future policy.

The Federal Open Market Committee is expected to cut interest rates at its September meeting, which will also provide a new Summary of Economic Projections. Marvin Loh, senior macro strategist at State Street Global Markets, examine the meeting, the SEP and Fed Chair Powell's press conference.

Federal Reserve chair Jerome Powell flagged a recent upward revision to income and savings data as a sign of economic strength. He said the information could factor into the central bank's monetary policy discourse during the Fed's next interest rate meeting in November.

After cutting rates 50 basis points in September, the Federal Open Market Committee meets after Election Day to determine monetary policy. Gary Pzegeo, head of fixed income at CIBC Private Wealth U.S., provides his take on the latest move.

This week, Federal Reserve Gov. Michelle Bowman cast the first dissenting vote at an FOMC meeting in years. On Friday, she explained why the economic data she's seen didn't convince her of the need to cut rates as much as her fellow governors thought.

Given the Fed's reluctance to "surprise markets or take actions that could be perceived as overtly political," Interactive Brokers Chief Strategist Steve Sosnick said, "we find it hard to believe that anything other than 25 bp is the likely outcome for the upcoming FOMC meeting."

"The numbers are weak, but not cusp of recession weak," Chris Low, chief economist at FHN Financial, said.

The Federal Reserve's preferred measure of inflation held steady at 2.6% for the third month in a row, a positive reading that increases the odds of a September rate cut.

"Fed watchers will be parsing Powell's comments for signs that a 50bp rate cut is on the table for September," noted Lauren Saidel-Baker, an economist with ITR Economics. "However, the notoriously tight-lipped chair is unlikely to confirm this, making a 25bp cut the most likely outcome."

Gary Quinzel, vice president of portfolio consulting at Wealth Enhancement Group, gives his views about monetary policy and offers his opinion on the FOMC statement and Fed Chair Jerome Powell's press conference.