Fed officials were divided on whether to cut rates by half a point in September, minutes show
Published On Oct 9, 2024, 2:00 PM
The Federal Reserve's recent meeting minutes reveal a split among officials regarding the extent of interest rate cuts. Some preferred a modest quarter-point reduction, expressing concerns about inflation sustainability and the labor market, while a majority backed a more aggressive half-point cut, marking the first such move in over four years. This reflects mixed sentiments about the economy, with strong job growth indicators suggesting the labor market is resilient. The Fed is in the early stages of easing, but future adjustments may be less aggressive than the recent cut. Markets expect the federal funds rate to stabilize between 3.25% and 3.5% by the end of 2025, indicating cautious optimism.
Stock Forecasts
TLT
Positive
The split in the Fed's approach, especially with discussions around potential smaller cuts, signifies a watchful stance towards economic indicators, particularly labor market data and inflation. This could lead to volatility in financial markets as investors adjust to changing monetary policy expectations.
SHY
Negative
The recent increased yields in both 10- and 2-year Treasuries following the Fed's decisions indicate a market reaction to the perceived strength in the economy and labor market. This could pressure bond prices down in the short term, especially if inflation remains a concern.
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