Federal Reserve Chair Jerome Powell will provide an update on the Fed’s ongoing rate easing cycle at the November meeting next week. Michael Arone tells Market Domination Hosts Alexandra Canal and Josh Lipton that he believes the central bank will deliver a 25 basis point cut at each of its two remaining meetings in 2024.
“I think the Fed is locked into 25 basis points next week. I think they’re likely locked into 25 basis points at the December meeting,” the strategist says. Arone adds the Fed is “acknowledging” that current rates are “well above inflation.” He notes that even with the 50 basis point cut in September, rates are “too restrictive” given the current state of inflation.
“A nice conservative kind of approach to cutting rates 25 basis points at a time makes the most sense, and I think that’s what the Fed will deliver next week and in December.”
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This post was written by Naomi Buchanan.
Video Transcript
Besides the election, we also have the fed meeting, right?
The election seems to be overshadowing that.
I heard you say that you’re in the soft landing camp, but we did get really strong GDP numbers P ce in line with expectations still elevated.
It feels to me like we’re nearing closer to a no landing.
So given all of these data points, what should the fed do next week?
Should they be cutting by more than 25?
I think the feds locked into 25 basis points next week.
I think they’re likely locked into 25 basis points at the December meeting.
And I think that they’re just acknowledging that at current target fed funds rates, they’re well above inflation.
So we got P CE data today.
It continues to suggest that top line headline numbers are close to that 2% target.
Certainly the four numbers X, food and energy are a little bit elevated, but where they are from a fed funds perspective remains too restrictive.
I think a nice conservative kind of uh approach to cutting rates 25 basis points at a time makes the most sense.
And I think that’s what the fed will deliver next week.
And in December, Michael, always great to see you and have you on the show.
Thanks for joining us.
Thanks Josh.
