Economists appear to be becoming increasingly confident that the Federal Reserve could be on the verge of introducing interest rate cuts. With the Fed’s two-day policy meeting commencing on Wednesday, investors are pricing around a 50% chance that the central bank will implement its first rate cut around March.
All eyes are on Fed Chair Jerome Powell’s press conference, with markets waiting eagerly for signs of the Fed’s policy direction going forward. “The stage is set for the Fed to take steps toward cutting rates in coming months. We expect the Fed to begin lowering the federal funds rate target range in March as it attempts to stick a soft landing,” Bloomberg Economics wrote.
The Fed’s policy trajectory will also be guided by more US economic data ahead. On Friday, the US monthly jobs report is due, while job openings and consumer confidence data are due on Tuesday. A quarterly employment cost index is scheduled to be released on Wednesday.