The Federal Reserve has begun its two-day FOMC (Federal Open Market Committee), with investors eagerly anticipating tomorrow's interest rate decision by the central bank. State Street Global Markets senior macro strategist Noel Dixon joins Morning Brief to offer his outlook on the future of monetary policy.
The Fed is widely expected to cut interest rates by 25 basis points tomorrow.
Dixon suggests the Federal Reserve will likely moderate its aggressive rate-cutting strategy next year. While a December cut remains certain, he believes the central bank will scale back its 2025 projections, forecasting one to two fewer cuts. The strategist points to ongoing economic uncertainties, predicting the long-term terminal rate will also increase.
"They're up against an economy where economic surprises continue to pick up," Dixon notes, emphasizing the need for a "more cautious" monetary policy that may introduce market volatility. He also highlights the economic challenges facing lower-income consumers, describing the current economic environment as "bifurcated" and "K-shaped."
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Watch the video above to hear how Dixon believes monetary policy will impact equity markets (^DJI, ^IXIC, ^GSPC).
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This post was written by Angel Smith