US Federal Reserve makes quarter point cut amid post-election uncertainty

While the December meeting will depend on the data over the next six weeks, the tone from Powell today made us marginally more confident in our call for another 25 (basis point) cut then,

JP Morgan's chief US economist, Michael Feroli, wrote in a note to clients on Thursday

Markets tend to like divided government as a way to control spending and keep deficits down,

said Bullard

Generally speaking, the U.S. economy looks quite resilient, and the labor market still looks very good,

Jim Bullard, the long-serving former St Louis Fed president, told AFP ahead of Election Day

Jerome Powellfed Chair

In the near term, the election will have no effects on our policy decisions,

Fed C. hair Jerome Powell told reporters, noting there was still uncertainty about what President-elect Trump's actual economic agenda would be

What's distressing to an economist like me is that, really, fiscal discipline has broken down for both political parties,

he said

We don't guess, we don't speculate, and we don't assume,

he said

Even with today's cut, policy is still restrictive,

he said but stressed there is no way to tell yet how restrictive

Economic activity has continued to expand at a solid pace,

the central bank's rate-setting Federal Open Market Committee meanwhile said at the end of a two-day policy meeting

This decision was taken following the US Federal Reserve’s announcement today to reduce the Interest Rate on Reserve Balances (IORB) by 25 basis points. The CBUAE has also decided to maintain the interest rate applicable to borrowing short-term liquidity from the CBUAE at 50 basis points above the Base Rate for all standing credit facilities,

the UAE Central Bank said in a statement

Labor market conditions have generally eased" since earlier in the year

the Fed said,

The Committee judges that the risks to achieving its employment and inflation goals are roughly in balance,

the document stated, a change from September when it noted "greater confidence" in the process

Inflation has made progress toward the committee’s 2 percent objective but remains somewhat elevated.”

In a statement, the Federal Open Market Committee (FOMC), the Fed board that sets interest rates, said

Jay Powell and the Federal Reserve Fail Again. No ‘guts,’ no sense, no vision! A terrible communicator!”

Trump said in a 2019 tweet

It’s something they know they shouldn’t be doing,

Trump said

The Fed raised rates from the equivalent of the ground floor to the 53rd floor of a skyscraper, now they are on the 47th floor and another rate cut will take us to the 45th floor — the view is not a whole lot different,

said Greg McBride, chief financial analyst at Bankrate.com

A victory for Trump could raise doubts over a December cut, and the Fed may strike a more hawkish note as a result,

Matthew Ryan, head of market strategy at financial services firm Ebury, said in a statement last week

If the Fed moves forward with more rate cuts, housing prices and mortgage rates would thus also likely drop, allowing more families to achieve the American dream,

they wrote

We intend to use our tools to keep it there,

he said

You can see over time, the direction of budget deficits, tariffs...can become a problem" for the Fed to manage

said TSLombard Chief U.S. Economist Steven Blitz

Although Trump has shown a consistent preference for easy monetary policy, we believe that the Fed would engage in a less aggressive cutting cycle under a second Trump administration due to the inflationary nature of additional tariffs,

analysts with Nomura Holdings financial group wrote in a note to clients this fall