Fed heads into December meeting with new president-elect, same economic concerns 

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It’s possible you’ll expertise déjà vu. However for the Fed, 2024 may be very completely different from 2016.

Whereas our president-elect and his bold financial plans (tax cuts, tariffs, tighter immigration insurance policies) are the identical right now as they have been eight years in the past, the financial system is in a really completely different place. Final week’s election outcomes could have come too late for committee members to take them under consideration of their rate of interest choice, however there’s one other assembly earlier than the tip of the 12 months.

In December 2016 (roughly six weeks after Donald Trump was elected to his first time period), the FOMC raised rates of interest for the primary time in a 12 months, as anticipated. What was extra of a shock was that committee members – together with present Fed Chairman Jerome Powell – began to extend the tempo of charge will increase for the following 12 months.

“Many individuals famous that the results on the financial system of such coverage adjustments, if applied, would possible be partially offset by tighter monetary situations, together with larger longer-term rates of interest and a strengthening of the greenback,” the minutes of the FOMC report mentioned of December. 2016 assembly.

Inflation is larger than in 2016, and the Fed is just in the beginning of its rate-cutting cycle. The labor market is in a precarious place, which may very well be disrupted by Trump’s mass deportation plans. Costs for items and providers are falling, however larger charges are a risk.

This week will see Fed statements that might shed some gentle on the central financial institution’s plans. The following policy-setting assembly is scheduled for December 17-18.