Table of Contents:
Introduction to the US elections and the Federal Reserve
The week that has just opened is of fundamental importance for financial markets, with attention focused on the presidential elections in the United States and the subsequent Federal Reserve meeting, scheduled for Thursday, November 7. These events could have significant repercussions on monetary policies and on the performance of
the global economy.
The Fed’s interest rate expectations
After a 50-basis point cut in the reference rate in September, analysts are waiting to understand what the US central bank’s next move will be.
According to forecasts by J.P. Morgan and Fitch Ratings, further rate cuts are expected by the end of 2024, but recent political uncertainties could lead to a more cautious strategy. Currently, a possible cut of 25 basis points is expected, a measure that would allow the Fed to maintain some flexibility in view of the election results
.
The opinions of Wall Street experts and leaders
During the Future Investment Initiative, an internationally important economic conference, CEOs of major financial institutions expressed skepticism about further rate cuts by the Fed. Most of the leaders in attendance didn’t raise their hands when asked if they expected two more rate cuts this year. Jenny Johnson, president of Franklin Templeton, stressed that inflation could remain higher than expected, further complicating the Fed’s decisions
.
Inflation and economic prospects
The inflation debate is central to current economic discussions. The consumer price index showed an increase of 2.4% in September, a figure that, although down compared to the previous month, indicates still significant price growth. David Solomon, CEO of Goldman Sachs, has warned that inflation may be more entrenched in the global economy than market participants are currently predicting. This scenario could influence the Fed’s future decisions and economic growth expectations.
Conclusions on future monetary policies
In a context where zero interest rates seem to be a thing of the past, Wall Street leaders, such as Morgan Stanley’s Ted Pick, warn that markets must prepare for a more challenging economic environment. Geopolitics, according to Pick, will once again influence economic dynamics in the coming decades. With presidential elections on the horizon and economic uncertainties persisting, financial markets are in a waiting phase, ready to react to any significant change
in monetary and fiscal policies.
