Bloomberg Intelligence Instant Reaction: The Fed Decides
Dec 18, 2024
Diane Swank from KPMG and Matt Lozelli of Deutsche Bank dive into the Federal Reserve's recent interest rate cuts. Swank offers sharp economic analysis while Lozelli shares his financial market expertise. They discuss how these policy changes impact inflation and labor markets, revealing the Fed's struggles against rising unemployment and shelter inflation trends. The duo explores market reactions, highlighting shifts in currency strength and equity prices, while questioning the Fed's confidence in its predictive models amid economic uncertainties.
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Fed Decision and Forecasts
- The Federal Reserve implemented a 25 basis point interest rate cut.
- They also revised their GDP forecast higher, unemployment lower, and PCE inflation higher.
Hawkish Cut and Market Reaction
- This is a hawkish cut, with the Fed now only anticipating two rate cuts.
- This raises questions about their messaging and parameters.
Fed's Rationale for Rate Cut
- The Fed recognizes the strong economy and questions the need for aggressive rate cuts.
- They are likely considering potential policy changes from the incoming administration.