The US Federal Reserve commenced its final interest rate meeting of the year on Tuesday, with many expecting another rate cut and indications that the pace of future cuts will slow in 2024.
The meeting began at 10:30 am local time (1530 GMT), and the Fed’s rate decision will be announced once the meeting concludes on Wednesday.
This marks the last rate decision before President Joe Biden leaves office on January 20, passing the presidency to Republican Donald Trump.
Analysts predict significant policy shifts under Trump’s second term, which could influence monetary policy in the upcoming year.
Trump, who will assume office with his party controlling Congress, has proposed raising tariffs on US imports, extending tax cuts from his first term, and initiating mass deportations of undocumented workers.
Despite this, financial market analysts and traders still widely expect the Fed to announce a 0.25% rate cut on Wednesday, aiming to support the labor market.
Economists at Bank of America predict a 25-basis-point reduction to a range of 4.25-4.5%. They also noted that markets have largely priced in this cut, so attention will be focused on the Fedβs communication regarding future policy direction.
According to CME Group data, futures traders anticipate about a 95% chance of a quarter-point rate cut.
Alongside the rate decision, the Fed will release updated economic forecasts, and many analysts expect a slight reduction in the number of rate cuts projected for 2024.
