BySimon Moore,
Senior Contributor.
Fixed income markets now project a 1 in 3 chance that the Federal Open Market Committee elects to cut interest rates on December 10. That’s largely in response to hawkish minutes released on November 19 for the FOMC’s October 28-29 meeting. Although policymakers did cut interest rates at that meeting, expectations for a December cut amongst policymakers appeared muted, at least at the time of the October meeting.
Specifically the October FOMC minutes noted that, “participants expressed strongly differing views about what policy decision would most likely be appropriate at the Committee’s December meeting. Most participants judged that further downward adjustments to the target range for the federal funds rate would likely be appropriate as the Committee moved to a more neutral policy stance over time, although several of these participants indicated that they did not necessarily view another 25 basis point reduction as likely to be appropriate at the December meeting. Several participants assessed that a further lowering of the target range for the federal funds rate could well be appropriate in December if the economy evolved about as they expected over the coming intermeeting period. Many participants suggested that, under their economic outlooks, it would likely be appropriate to keep the target range unchanged for the rest of the year. All participants agreed that monetary policy was not on a preset course and would be informed by a wide range of incoming data, the evolving economic outlook, and the balance of risks.”
