The Federal Reserve is expected to announce another interest rate cut today in the face of slowing inflation and a softening labor market. The Fed’s interest rate influences lending costs for banks and consumer debt, and is currently targeted between 4.75 percent and 5.0 percent. In addition to the more immediate rate cut expected today, attention will also be paid to how Chair Jerome Powell and the Fed will navigate the economic future, although Powell likely avoid directly discussing the economic ramifications of the recent election and the possible policies of President-elect Trump.
Looking ahead, investors expect another interest rate cut in December, a possible pause in January, and more reductions through 2025. However, targeting the right cuts will be key as President-elect Trump heads back to the White House after campaigning on tax cuts and tariffs, with some economists pointing to isolationist polities as possibly triggering higher inflation, per CNBC.
Market analysts are also interested in the “terminal rate,” or the final interest rate the Fed aims to reach in this cycle. Speculation is that the Fed may end the rate cut cycle with rates between 3.75 percent and 4.0 percent by late 2025, down from the current level following recent reductions. Powell may also discuss the Fed’s recent balance sheet reduction efforts, where it has cut nearly $2 trillion in bond holdings since June of 2022. This move is intended to manage inflation without impacting economic growth significantly, though it may slow as early as 2025.
Meanwhile, new-vehicle affordability remained unchanged in September, per a report from Cox Automotive / Moody’s Analytics Vehicle Affordability Index. According to Cox Automotive Chief Economist Jonathan Smoke, a “material improvement in auto loan rates or the overall affordability of new vehicles” failed to manifest following a larger-than-expected rate cut this past September. That said, “September was the first month in two and a half years in which auto loan rates decreased on a year-over-year basis,” Smoke states.
The estimated average auto loan rate was recorded on September 30th at 9.53 percent, declining 30 basis points, while the average new-vehicle price increased by 0.8 percent, countered by higher incentives and income growth. Average car payments were recorded at $740, an increase of 0.2 percent.
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Its like they were waiting to see if Trump won the election to forecast inflation coming down.
A quarter point means absolutely nothing. Some pundits are expecting big inflation to return under Trump, so who knows?
Inflation didn’t happen up until the dems started locking things down during COVID and threw money around at people not working. This one was entirely on them and the excuse of “oh well economic impacts take time and are felt during the next administration” holds partly true, when it was mostly Dem run states during Trumps time that forced the lockdowns and threw around the stimulus money. And of course. It was his flourishing economy to ruin right before the 2020 elections so why not take advantage of the opportunity?
Businesses in my town that have been around since the 20s, survived the great depression, WW2, and the Great Recession, but the forced lockdowns finally did them in. So now tell me. Why are we surprised the Dems lost both electoral and popular votes? I am not afraid of another 4 years of Trump. I am afraid of the Dems willingness to burn down the country just to stick it to Trump.