By Howard Schneider
WASHINGTON (Reuters) – Federal Reserve officials say they are likely to continue cutting interest rates for now, and investors still expect them to do so at the U.S. central bank’s Dec. 17-18 meeting.
But how far they will go beyond that remains an open question, and minutes from the Federal Reserve’s meeting earlier this month are expected to show the start of a debate that will shape the financial landscape facing the incoming U.S. administration. Trump.
Minutes from that session will be released at 2 p.m. EST (1900 GMT) on Tuesday and will provide a detailed account of the Nov. 6-7 session, in which officials grappled with data showing stronger-than-expected economic growth. expected and further growth. inflation higher than expected. While job growth slowed in October, the feeling among policymakers was that the U.S. economy continued to beat expectations.
“It’s really remarkable how well the U.S. economy has performed, with strong growth, a strong labor market and inflation coming down,” Fed Chair Jerome Powell said at a Nov. 7 news conference after the central bank announced that it was going to cut its reference policy. rate by a quarter of a percentage point to the range of 4.50%-4.75%.
“We’re on the path toward a more neutral stance…We’re just going to have to see where the data takes us…I’m not ruling (December) in or out,” Powell said of the Fed’s decision. plans to make monetary policy less restrictive and, ultimately, neither stimulate nor restrict economic activity.
Public comments since the meeting, often reflecting positions taken during the two days of deliberations, have shown a wide division among Fed officials who feel that monetary policy may already be close to the neutral level and, as a result, near a possible stop. point for rate cuts, and those expecting a likely longer cut cycle.
Powell just a week after the meeting said the economy was “not sending any signals that we should be in a hurry to lower rates” and that the central bank could “carefully” decide on further reductions in borrowing costs.
His comments contributed to what has been a steady decline in market expectations for a rate cut next month, with a quarter-percentage-point reduction given a probability of just 53% as of Monday afternoon.
TRUMP EFFECT
While officials such as Federal Reserve Governor Lisa Cook have focused on what she sees as a steady decline in inflation that has yet to be accompanied by potential improvements in productivity, others say they still see the risk of inflation as paramount.