Today, we are looking at the other major economic news from this week—the November FOMC meeting—and sharing a recap of the eventful last month before the election.
The Fed Cuts Rates by 0.25%
Markets have known this week’s Federal Reserve meeting would be highly charged given its proximity to Election Day. Less than two days after polls closed and former President Donald Trump became President-elect, Fed Chair Powell faced the media at the FOMC press conference after a second straight interest rate cut.We expected a 25 basis point cut, as discussed in our Q4 Market Outlook Webinar. Markets also had this cut priced in. Powell justified the cut with the same data we have been citing as a positive for the Fed: the labor market has cooled from a hotter state and remains solid; inflation has eased; and economic activity remains expansive.
On a more personal note than is usual at these press conferences, Powell addressed questions about his future, which became a topic after comments from President-elect Trump over the past several weeks. When asked whether he would leave the Fed if the president asked, Powell responded with a flat “NO.” The lone follow-up question asked whether the president can demote him or other leadership, to which Powell replied, “Not permitted under the law” — twice.
While Chair Powell was firm about the upcoming months, his term expires in May 2026. We will let others speculate about the major changes anticipated in 2026 and 2027, at which time other notable officials’ terms will also end.
What we do want to address is how markets are perceiving this cut as we look to the last FOMC meeting of the year in December and then the early 2025 meetings in January and March.
There are six weeks until the December meeting with plenty of economic data releases before then, starting with October CPI next Wednesday. If the Fed cuts by another 25bps in December, markets are currently pricing in a pause at the January meeting then a cut at the March meeting. It is important to note that, historically, once the Fed starts on a path of cutting or hiking, it tries to remain consistent—not stop and start.
We will continue to monitor these releases and review what they mean as we look toward the last Fed meeting of the year. An interesting point about the January 2025 meeting: it is less than 10 days after Inauguration Day.
October Monthly Market Recap
It was a very eventful October, filled with positive economic data, as highlighted in last week’s Investment Insights, and events that could impact economic data, including two hurricanes and labor union strikes.If you haven’t already, we invite you to review the October Monthly Market Recap, linked here, for more commentary from the Investment Committee.
