The market is in a phase of intense expectation in the context of the next monetary policy decisions of the Federal Reserve (Fed). The institution began considering projections made in September that suggest a possible 50 basis point reduction in target assets before the end of the year, in the two pending meetings.
Uncertainty about macroeconomic data
Investors are having concerns about the published macroeconomic data. At an event marking Saudi Arabia's Future Reversion Initiative, executives from major Wall Street banks, including Goldman Sachs, Morgan Stanley and Standard Chartered, expressed skepticism about releasing information sooner of the end of the year. According to a Bloomberg panel, “most are attached to predictions” regarding this information.
Larry Fink, CEO of BlackRock, also commented on the situation, reporting that the world is facing higher levels of inflation than it anticipated. I became infatuated with not wanting to see many things of interest as low as some predictions.
Election week and its impact
The Fed's next meeting is scheduled for November 6-7, coinciding with the celebration of the US presidential election on November 5. This added a further layer of uncertainty, as the conclusions of the meeting will not be immediately public, which could influence market decisions.
David Solomon, CEO of Goldman Sachs, demonstrated the difficulty of setting monetary policy in an election period, suggesting that the political mix resulting from the election could have a significant impact on economic decisions. Markets are refraining from setting values until there is greater clarity on the political landscape.
Federal Reserve Expectations
In September, the Fed voted to cut the interest rate to a range of 4.75% to 5%, after holding it at its highest level in two decades for more than a year. This adjustment represents a significant change and the first report in more than four years.
The Fed faces a complex environment, characterized by economic uncertainty and the electoral context. As the election approaches, markets will be alert to any signals about how political decisions could affect monetary policy and the broader economy. The combination of economic data, inflation expectations and the political environment will become a crucial issue in the Federal Reserve's next decisions.
