Fed Chair Jerome Powell will hold a crucial press conference tomorrow after the Fed’s rate decision. Markets are on edge: futures are pricing a near-100% chance of a quarter-point rate cut. The Fed’s Open Market Committee will meet Oct. 28–29 (announcement Wed. Oct. 29 at 2:00 PM Eastern, 10:00 PM Dubai), followed by Powell’s press conference at 2:30 PM Eastern (10:30 PM Dubai). Every word from Powell will be parsed for clues.
Meeting Schedule (Dubai Time)
Wed, Oct 29 – 10:00 PM: Fed announces policy rate. A 25 bps cut to a 3.75%-4.00% target range is widely expected.
Wed, Oct 29 – 10:30 PM: Chair Jerome Powell holds a press conference. Markets will watch for dovish signals and guidance on the Fed’s balance sheet.
Fed officials are reacting to easing pressures in the economy. Climbing unemployment claims suggest labor demand is cooling, and the ongoing U.S. government shutdown has delayed many reports on jobs and inflation. In fact, inflation has been relatively mild – consumer prices were up just 3.0% year-on-year in September – which cuts inflation worries. With growth moderate and inflation above target but slowing, policymakers have signaled readiness to ease policy further if needed.
Fed communications have already contained dovish hints. Last month’s statement introduced wording about “additional adjustments” to the policy rate, which Vice-Chair Michelle Bowman flagged as foreshadowing future cuts. Powell himself is expected to play it cautious; analysts say he will likely leave the door open on further cuts and is unlikely to pre-commit to a December easing. Still, most economists believe the Fed will continue to ease if economic conditions weaken.
Balance-sheet runoff to end soon. In addition to cutting rates, the Fed is expected to announce the winding down of its quantitative tightening (QT) program. Powell has signaled that QT could stop “in the coming months”. Indeed, reports suggest the Fed “could signal this week it will soon stop shrinking its balance sheet, ending its so-called quantitative tightening as soon as this month”. Ending QT would be another dovish shift – effectively leaving interest rates as the main policy tool going forward.
Markets are already positioned for easy money. Fed funds futures now reflect almost certain odds of a 25 bp cut this week, and about a 95% chance of another cut by December. Equities and bonds have rallied on these easing bets. Still, traders will brace for volatility. A more hawkish tone from Powell could send yields up and stocks down, while a clearly dovish stance may spark rallies. This is indeed the “decisive night” for U.S. interest rates: every word from Powell will move the markets.#WriteToEarnUpgrade #MarketPullback #FranceBTCReserveBill #AltcoinETFsLaunch
