CB Views: November 2024 FOMC Recap

Fed policy normalization to continue well into 2025…

Fed delivers a 2^nd rate adjustment lower with a balanced message

• The Fed downshifted rate cuts to the more typical 25bp increments at this meeting, taking the Fed Funds target rate range to 4.5-4.75%
• The FOMC views the risks between their inflation and employment mandates as balanced, where they are well positioned to achieve their dual mandate by tweaking the normalization path if needed.
• At this point, chair Powell didn’t indicate that their views on the neutral rate has changed; thus, they view current rates as restrictive and in need of further cuts (suggesting a December cut is still in play).
• The Fed will not factor future fiscal policy into current policy decisions.
• We confirm our view that the Fed cuts rates in December by another quarter point, and then either skip at the January or March meeting to establish cuts at every other meeting pace.
• At this point, we slightly modify our red sweep forecast scenario as per our last monthly (see link) by only adding back the cut in December.