Fed meeting November 2024: A unanimous quarter-point cut

The Federal Reserve has opted to cut interest rates by a quarter point, indicating its comfort with current inflation levels while maintaining a balanced view on employment and inflation objectives. This decision marks a total of 75 basis points cut in the current easing cycle, mirroring the 1995-1996 cycle, with expectations of further cuts that could benefit risk assets. Fed Chair Jay Powell highlighted significant progress on inflation, though housing services prices reflect past rather than current pressures, and emphasized that monetary policy remains restrictive amid a cooling labor market.

The Fed is not adjusting its policy in anticipation of potential economic impacts from the incoming Trump administration's policies, preferring to incorporate such effects into its models as they become clearer. Powell assured that inflation expectations remain anchored, with the Fed ready to act swiftly if that changes. Despite acknowledging possible future policy changes under the new administration, the Fed's immediate focus remains on its dual mandates without speculative adjustments.

Powell's leadership continuity until 2026 ensures stability in Fed policy direction, with the possibility of a pause in rate changes by December based on comprehensive data assessments. The Fed remains committed to recalibrating policy as needed, with any potential rate hikes in 2025 being highly unlikely at this stage. Overall, the Fed's strategy reflects confidence in managing economic conditions while remaining responsive to evolving data.