All eyes are on the US Federal Reserve as its highly anticipated meeting approaches at the end of October, with the probability of an interest rate cut rising to over 98.9% according to the CME FedWatch tool, reflecting the market's conviction that the Fed is on its way to beginning a new phase of monetary easing to support the economy.
According to a Reuters poll, 115 out of 117 economists predicted that the Federal Reserve would cut interest rates by 25 basis points at its October meeting, with a possible further cut in December, bringing the rate down to between 3.75% and 4.00% by the end of this month.
These projections come amid signs of slowing inflation, a weak labor market, and delays in economic data releases due to the temporary government shutdown, leading many analysts to believe that the Fed does not have the luxury of waiting.
Federal Reserve officials held differing views; while Christopher Waller supported further rate cuts to support the labor market, others, such as Stephen Miran, cautioned against acting hastily for fear of triggering a new wave of inflation. Meanwhile, US President Donald Trump continued to push for faster and deeper interest rate cuts to stimulate growth.
Analysts believe that any decision to cut interest rates will give risky assets such as stocks, gold, and cryptocurrencies a strong boost, while continued inflation may lead to a return to monetary tightening policies.
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