Fed Faces Critical Decision: Rate Cut or Hold Steady?

The Federal Reserve's November 6-7 meeting is expected to determine the course of interest rates, with key inflation and employment data likely shaping the outcome.

Economic indicators released this week may influence the Fed’s decision, with Thursday’s inflation and Friday’s employment reports being closely watched.

Will Stith from Wilmington Trust suggests a high inflation reading combined with a strong jobs report could prompt the Fed to pause, reflecting on the recent 50-basis-point cut.

LPL Financial’s Jeffrey Roach also sees robust job growth as a potential reason for a pause, while others, like Harris Financial Group’s Jamie Cox, predict a 25-basis-point cut regardless of data. Morgan Stanley’s Ellen Zentner anticipates the Fed will cut rates if the job report aligns with expectations.

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The Fed is set to analyze the PCE inflation index, projected to show a slight drop in core inflation, aiming for a 2% target. Meanwhile, the October jobs report could be skewed by recent natural disasters and labor strikes, with 125,000 jobs expected and the unemployment rate steady at 4.1%.

Despite some concerns, EY’s Gregory Dacko anticipates two further cuts by year-end as part of the Fed’s gradual approach to rate adjustments.

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Kosta Gushterov

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