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Fed to start discussion on possible interest rate cut!🚀🪄

So far, policymakers have avoided making a definitive decision, despite the fact that discussion of a possible rate cut began in December.🗓️

The Federal Open Market Committee is expected to to leave interest rates unchanged for the fourth meeting in a row on January 30 and 31 in Washington. However, all attention is on the March FOMC meeting and the follow-up.

The Fed has hinted at the possible start of a discussion on the broader parameters of interest rate cuts. Although San Francisco Fed President Mary Daly stresses that it is premature to expect an immediate rate cut. Caution is key given the history of over-reacting to economic changes with undesirable consequences.

She wants to be sure inflation is on track to meet the central bank's 2% target before easing policy.

Economic activity and labor markets are stable, but the focus is on inflation. A misstep could mean repeating past mistakes. Fed Governor Christopher Waller stresses the need for patience while investors adjust their expectations for a possible rate cut.

In the coming period, inflation and gross domestic product data will be key to the FOMC's decision-making. However, the pre-election period brings an additional layer of complications, with expectations of potential criticism from policymakers.

When do you think the Fed will come out with its first interest rate cut?

I do not expect a rate cut in March after the December data.