Recent discussions and analyses suggest that the Federal Reserve may delay interest rate cuts until after the November presidential election, citing U.S. politics as a potential reason. Analysts, including Santander's Stephen Stanley, note the Fed's historical reluctance to cut rates when the US ISM Manufacturing index is above 50, a scenario that currently aligns with expectations of a strong economy and controlled inflation. Observations indicate that if key economic indicators such as payrolls and the Consumer Price Index (CPI) continue to exceed consensus in February, it could lead to the pricing out of potential rate cuts in June or July. The consensus among market analysts and commentators is that starting a rate-cutting cycle close to the election, specifically on September 18 or November 7, could be perceived as politically motivated. This sentiment is reinforced by the Fed's aggressive rate hikes in 2022 and 2023, marking the fastest pace in four decades, and the current tempering of expectations for imminent rate reductions.
The Fed hiked interest rates in 2022 and 2023 at the fastest pace in four decades. Now, officials are tempering expectations that cuts will come as quickly https://t.co/bEDsrHhqhR
Our Ahead Of The Herd continues doubting market assumption Fed rate cuts are coming soon. Fiscal stimulus will likely levitate the economy into Q3 while inflation shows upward bounce. First rate cuts just before Election would look politically biased...no cuts before year end? https://t.co/nmHqiOLcHn
FED MAY DELAY RATE CUTS UNTIL AFTER ELECTION $tlt $tnx $spy $es https://t.co/IzMloMEGt8
Federal Reserve May Delay Rate Cuts Until After Presidential Election - Santander note
🔴 US POLITICS COULD BE A REASON FOR THE FED TO WAIT UNTIL AFTER THE NOVEMBER PRESIDENTIAL ELECTION TO CUT RATES - SANTANDER'S STEPHEN STANLEY.
❖ Fed May Delay Rate Cuts Until After Presidential Election U.S. politics could be a reason for the Fed to wait until after the November presidential election to cut rates, Santander's Stephen Stanley says in a note. "The Federal Reserve is an independent central bank, but…
AOTH If payrolls & CPI are again above consensus in Feb, we would look for June/July cuts to get priced out. After, surely the Fed won't START a cutting cycle in Sep 18 or Nov 7 - both WOULD be seen as POLITICAL. @Halsrethink For the details, go to: https://t.co/GJbVKwqaRZ https://t.co/QPDUnV230Z
TLDR: if the Fed don't cut in June then politics might mean they've missed their chance for the rest of the year https://t.co/GonkNngPeR
AHEAD OF THE HERD US ISM Manufacturing is headed to above 50, & the Fed has historically never cut rates with it above 50. This all fits with our theses of no landing & a bottom in inflation. @Halsrethink For the details, go to: https://t.co/GJbVKwqaRZ https://t.co/2oj1S6kQxJ