The Federal Reserve will announce its interest rate resolution and summary of economic expectations at 2:00 next Thursday, and analysts are divided on the magnitude of the rate cuts

The Federal Reserve will announce its interest rate resolution and summary of economic expectations at 2:00 next Thursday, and analysts are divided on the magnitude of the rate cuts.

According to the schedule, the Federal Reserve will announce its interest rate resolution and summary of economic expectations at 2:00 next Thursday. Traders are pricing in a near-equal likelihood that the Fed will cut rates by 25 basis points and 50 basis points next week. The changing bets reflect one of the key questions facing markets today: whether the Fed will stop labor market weakness by cutting rates aggressively, or whether it will take a slower pace of rate cuts to remain on hold.

Federal funds rate futures are pricing in a Fed rate cut of more than two percentage points over the next 12 months, a scenario rarely seen outside of a recession. With the S&P 500 near all-time highs and credit spreads narrowing, starting a rate-cutting cycle with a big cut only seems to happen when the Fed knows something no one else does,” said James St. Aubin, chief investment officer at Ocean Park Asset Management, which manages $5.3 billion in assets. happens. I think a 50 basis point rate cut could do more harm than good as far as market sentiment is concerned.”

In any case, even if the Fed cuts rates by 25 basis points next week, that meeting could be viewed as a dovish cut as long as Powell doesn't object to the expectation of one, or even two, 50-basis-point cuts in the last two meetings of the year.