• Investing
  • Stock
  • Editor’s Pick
  • Economy
The Significant Deals
Editor's Pick

What would it take for the Fed to pause rate cuts?

by November 23, 2024
written by November 23, 2024

Investing.com — A more cautious tone from the Federal Reserve officials on further rate cuts and the recent swath of upbeat economic data has many speculating whether the central bank could pause rates, but strategist at Citi continue to expect inflation and job growth will continue to slow, allowing the Fed to persist with rate cuts.

“Fed officials are unlikely to pause rate cuts before reaching 4% policy rates absent a pickup in inflation,” Citi said in a note. “Whether rate cuts slow at that point will depend on whether or not the labor market – which is continuing to soften – stabilizes.”

The Fed appears to be mapping out a two-phase framework for rate cuts as part of a path toward bringing rates down to the neutral rate — one that neither boosts nor drags on economic growth. 

“In the first phase, policy rates that are clearly in restrictive territory need to be reduced to neutral as the Fed desires no further loosening of the labor market.” Citi said. “The second phase would involve moving more slowly once rates are in the “plausible range” for neutral,” it added.

After starting its rate-cut cycle in September, the Fed is two cuts deep into the cycle, with rates still widely estimated to be in restrictive territory suggesting further room to ease. 

“A tightening of labor markets and/or a sustained pickup in inflation,” would point to rates above neutral. But neither looks likely, it added.

Core inflation has been “somewhat stronger” over the last two months, Citi said, though believes that it is likely to slow again in November and December allowing the Fed to persist with ongoing rate cuts. 

“In our base case, cooling inflation and rising unemployment will keep Fed officials cutting rates at a pace of at least 25bp per meeting until reaching 3%,” Citi added.

In the near term, the bar remains high for a pause at the Fed’s December meeting and would require an upside surprise in November jobs and inflation. 

Looking further ahead, a pause is possible, however, if the unemployment rate stabilizes around current levels. 

But this would be “contrary to our expectations,” Citi said, expecting the “unemployment rate to resume its transit higher in November.”

This post appeared first on investing.com
0 comment
0
FacebookTwitterPinterestEmail

previous post
Trump taps Scott Bessent for Treasury, capping long drama over choice
next post
Brazil freezes spending at $3.33 billion to comply with fiscal rules

You may also like

China central bank conducts 1.7 trln yuan of...

January 27, 2025

Fuji Media, rocked by sexual misconduct allegations, says...

January 27, 2025

ECB president fears loss of central bank independence

January 27, 2025

European tech shares tumble as China’s AI push...

January 27, 2025

Futures slip as investors eye China’s latest AI...

January 27, 2025

Markets may be repeating the mistake of 2019,...

January 27, 2025

How billionaire Caltagirone could influence Italy’s banking M&A...

January 27, 2025

How Italy’s MPS went from near collapse to...

January 27, 2025

Analysis-To weather Trump, emerging market investors look to...

January 27, 2025

Chinese AI startup DeepSeek overtakes ChatGPT on Apple...

January 27, 2025
Fill Out & Get More Relevant News








    Stay ahead of the market and unlock exclusive trading insights & timely news. We value your privacy - your information is secure, and you can unsubscribe anytime. Gain an edge with hand-picked trading opportunities, stay informed with market-moving updates, and learn from expert tips & strategies.

    Recent Posts

    • Divided Fed proposes rule to ease capital requirements for big Wall Street banks

      June 26, 2025
    • Women’s Tennis Association extends media rights deal with Tennis Channel through 2032

      June 26, 2025
    • Bumble shares jump 26% as dating company plans to axe 30% of workforce

      June 26, 2025
    • Small-business AI use is lagging, but one firm is channeling Sherlock Holmes and knocking out ‘grunt work’

      June 25, 2025

    Categories

    • Economy (245)
    • Editor's Pick (3,646)
    • Investing (534)
    • Stock (6,426)

    Latest News

    • Divided Fed proposes rule to ease capital requirements for big Wall Street banks
    • Women’s Tennis Association extends media rights deal with Tennis Channel through 2032

    Popular News

    • Tesla’s China factory head Song Gang leaves company, letter to staff shows
    • Japan wage growth gathers steam as reluctant retailers raise pay

    About The Significant deals

    • Privacy Policy
    • Terms & Conditions

    Copyright © 2025 thesignificantdeals.com | All Rights Reserved

    The Significant Deals
    • Investing
    • Stock
    • Editor’s Pick
    • Economy