Following the events after the 2024 US presidential election held hours ago, it seems everybody is ready to get back to work. After introducing an outsized 50 basis points rate cut in September, the Fed is also wasting no time opening up shop again. In a similar fashion, analysts have also started speculating what the next Fed meeting might bring. 

The United States Federal Reserve will hold its November meeting just a day after the US presidential election, and analysts are foreseeing a rate cut. With inflation largely moderating in the economy, the Fed is expected to cut interest rates by at least 25 basis points, an action that will bring the benchmark closer to neutral territory. 

If this is indeed implemented, it will mark the Fed’s second reduction this year and take the Fed funds rate to the 4.50%-4.75% range. But even though this has yet to be announced, the market seems already confident in its certainty. 

CME’s FedWatch tool has revealed that traders have assigned an almost 100% chance to the Fed, bringing the benchmark interest rate range to 4.5%-4.7 % on Thursday. In light of this, analysts say that the 25 basis point rate cut is already naturally priced in by itself and could be a non-event. 

There is also a significant interest in Fed Chair Jerome Powell's post-meeting meeting commentary. Many believe it could bring even more volatility than the foreseen rate cut, especially if he signals the potential for a December pause. 

While not strongly expected, the case for a potential pause in rate cuts for December has been coming up as recent batches of strong economic indicators, including brisk GDP growth and a 4.1% unemployment rate, have emerged. 

If the Fed Chairman does signal a December pause, it could suggest that the FED is opting for a wait-and-see approach while assessing the sustainability of economic growth against inflationary pressures. 

Some analysts think the Fed may adopt this approach after it misjudged the coronavirus-induced supply-push inflation as transitory in 2021. They presume this past mistake may lead the Fed to choose to err on the side of caution this time around. 

In light of Donald Trump’s victory in the US presidential election, the Fed may also reconsider new strategies in the months ahead.

Even before becoming president again, Trump has always been vocal about his preference for the Fed to adopt lower interest rates. In his opinion, it favors economic growth. His imminent return to the white house may see him renew his call for such policies. 

It is also believed that Trump’s re-election may renew discussions around tax cuts, deregulation, and government spending. As for Bitcoin and other risk assets, analysts think they may see downward volatility should Powell express any concerns about Trump’s policies. This might also in turn, force the markets to reassess any expectations for rate cuts in the coming months.

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