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According to CME's "FedWatch": the probability of the Federal Reserve cutting interest rates by 25 basis points in December is 39.6%, and the probability of keeping rates unchanged is 60.4%. The probability of the Fed cutting rates by a cumulative total of 25 basis points by January next year is 50.2%, the probability of keeping rates unchanged is 29.7%, and the probability of a cumulative rate cut of 50 basis points is 20.2%.
Kevin Hassett, director of the National Economic Council, suggests that the Federal Reserve should cut interest rates in December due to the economic impact of the government shutdown, despite a strong jobs report for September.
Cleveland Fed President Beth Hammack warns that cutting interest rates to support a weakening labor market may extend high inflation and encourage risky financial behavior. With inflation above the Fed's 2% target for 4.5 years, Hammack suggests maintaining a restrictive policy stance. The probability of a rate cut next month increased to 40%. Fed Governor Michael Barr emphasizes caution with interest rates, as inflation remains above target. The Fed's October meeting minutes reveal differing views on future rate decisions.
Fed Chair Jerome Powell is expected to maintain interest rates at the year's final Federal Reserve meeting, with a potential dovish tone due to mixed labor market signals. September's employment data showed a rise in unemployment to 4.4%, the highest since October 2021, despite a payroll increase. Economists suggest a 'dovish hold' is likely, with divided views within the FOMC. Market odds for a December rate cut have increased, with Treasury yields easing slightly.
Infrastructure Capital analyst Jay Hatfield predicts the Federal Reserve will hold rates steady in December despite unexpected jobs data. He expects four rate cuts next year after the new Fed chairman takes office, with the 10-year Treasury yield remaining around 4%, benefiting the stock market.
