🤑 It doesn’t get more affordable. Grab this 60% OFF Black Friday offer before it disappears…CLAIM SALE

Fed December rate cut on track as policy remains restrictive: UBS

Published 2024-11-13, 02:42 p/m
© Reuters

Investing.com -- The road ahead for a December rate cut remains in place as recent comments from Fed members signal that policy is still in restrictive territory, UBS said in a Wednesday note.

"Comments from Fed officials in recent days showed that policymakers still view the current interest rate as restrictive," UBS strategists said, pointing to remarks from regional Fed presidents that underscore the central bank's stance.

Data on Wednesday showed that headline consumer prices rose 2.6% last month on an annualized basis, matching economists expectations.

Core CPI, which strips out more volatile items like food and fuel, rose 3.3% year-on-year.

Following the in-line inflation data, Minneapolis Fed President Neel Kashkari said that inflation is moving in the right direction. 

The comments arrived a day after  Richmond Fed President Thomas Barkin described the current level of rates as "somewhat less restrictive" than before."

Ahead of the inflation data, concerns about price pressures resurfaced in recent months amdi economic data pointing to a stronger economy than previously anticipated.

As well as a stronger economy, the potential impact of President-elect Donald Trump's likely policies on tax, tariffs, and fiscal spending is also contributing to a repricing of Fed policy expectations, the strategists said.

Despite these concerns, the bank believes the broad disinflation trend will continue, allowing the Fed to maintain its easing path.

The Fed's preferred inflation gauge, the personal consumption expenditures, or PCE, price index, fell to 2.1% in September, its lowest level in three years.

"We continue to believe that the current US economic condition does not warrant an actively restrictive monetary policy," they added.

Against expectations for ongoing monetary policy, the bank recommends that investors shift excess cash into quality fixed income or consider diversified fixed income strategies to enhance portfolio income.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.