Citi sees Fed cutting rates by 50 bps in November
Investing.com-- Citi analysts said they maintained their outlook for a 50 basis point cut by the Federal Reserve in November, after the central bank cut rates by a similar margin in its first cut since 2020.by 50 bps to a range of 4.75% to 5%, and signaled that more cuts were likely on tap. The central bank signaled that risks around its outlook for bringing down inflation and a cooling labor market were now roughly balanced.
Citi said that Wednesday’s cut completed the Fed’s pivot towards addressing labor market weakness from curbing further inflation risks. “Powell noted a number of times that today’s 50bp cut is a “commitment” to not get behind the curve which suggests the bar for further large rate reductions is very low. We continue to see risks as balanced toward a more rapid softening of labor market data and a more aggressive pace of rate cuts,” Citi analysts wrote in a Wednesday note.
Still, Powell warned that the Fed was unlikely to go back to an era of ultra-low rates, and that he saw a much higher neutral rate for the Fed than previous instances.Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors.
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