Standard Chartered expects the Federal Reserve to deliver a 25-basis-point rate cut at today's policy meeting, with Chair Jerome Powell likely to tread carefully in his remarks as the ongoing U.S. government shutdown continues to distort the flow of economic data.
- The bank noted that expectations for the effective fed funds rate after the 29 October meeting have barely moved — fluctuating between 3.848% and 3.863% — as the lack of new data leaves markets with little reason to change their view.
- Powell, it said, is likely to emphasise the Fed’s commitment to “doing the best we can to assess the economy” despite limited information.
Standard Chartered expects Powell to signal that another 25bp cut in December remains possible but that he will avoid committing to any path for 2026:
- Governor Miran is likely to dissent again, favouring a 50bp reduction
- a hawkish dissent could emerge from Kansas City Fed President Schmid or possibly St Louis Fed’s Musalem, though the latter has kept his language cautious
- The bank said it remains “surprised by Goolsbee’s ongoing hawkishness” but doubts he will formally dissent.
Standard Chartered also forecasts the end of quantitative tightening (QT) at this meeting, though it flagged an unusual risk that Vice-Chair for Regulation Michelle Bowman could vote to keep QT running slightly longer.
Powell’s press-conference remarks are expected to be the key market driver. Standard Chartered expressed scepticism that the Fed has access to reliable private-sector data to replace missing official statistics, and said any attempt by Powell to “look through” the shutdown could move markets.
The bank also warned that questions on artificial intelligence — now a recurring theme in Fed briefings — could trigger market swings if Powell offers even tentative views on its economic implications.
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Earlier:
- Coming up - Fed expected to cut rates by 25 bps, Powell seen offering limited guidance
- policy decision is due Wednesday at 2 p.m. in Washington, followed by Powell’s press conference 30 minutes later. The meeting will not include updated forecasts or rate projections.
- Skip the jargon. Understand today’s Fed decision in one quick read.
