The FED, which started the interest rate reduction cycle with a 50 basis point cut in September, cut rates by 25 basis points in November.
As the FED prepares to announce its final interest rate decision for 2024 in December, expectations for a rate cut have diminished. In a statement yesterday, FED Chairman Jerome Powell said that there should be no rush to lower interest rates.
Following Powell, Boston FED President Susan Collins also made warm statements.
Speaking to the Wall Street Journal, Collins said another rate cut was on the table in December, but that the decision to cut rates was not final.
Collins said the Fed may eventually need to slow down the pace of interest rate cuts and that it was too early to say whether that would happen in December, adding that they wanted to see more data before making their December decision.
“A rate cut in December is definitely on the table, but it is not a definitive decision.
We will see more data by December and continue to weigh what makes sense.
“I see no reason to maintain restrictive policy in the absence of evidence of new price pressures.”
“We will get to a place where it will be appropriate to proceed more slowly and more cautiously,” said Collins, who will take a seat on the Federal Reserve’s FOMC as a voting member next year.
The FED's next meeting will be held on December 17-18. Following Powell's statements, interest rate cut expectations have dropped and a 25 basis point rate cut is priced in at 62.1% on the CME FedWatchTool.
*This is not investment advice.