Fed policy outlook: the next FOMC meeting is a week away
Fed policy outlook: the next FOMC meeting is a week away and a 25 bp rate cut seems like a done deal. The futures are priced for such action, and there hasn't been any significant push back from key policymakers (Chair Powell, VC Clarida, and NY's Williams) to suggest the markets have it wrong and an easing is off the table. The Fed is likely to indicate this is another insurance move as the issues that underpinned the July and September reductions are still in place, including uncertainties over trade and Brexit, softer growth abroad, concerns over spillover to the U.S., and low inflation. However, there's a lot of uncertainty regarding another easing at year end. Analysts suspect the policy statement will reiterate that the Fed will "act as appropriate," which will leave the door open. But analysts believe that after next week's cut, the Committee will stand back and monitor conditions for awhile. The Fed may address the conditions in the money markets and could announce it's going to implement a permanent repo facility.