Berliner Tageblatt - US Fed begins final 2024 rate meeting with cut expected

The meeting got underway at 10:30 am local time (1530 GMT), the Fed announced in a statement. Its rate decision will be published once the meeting concludes on Wednesday.

It is the last Fed rate decision before President Joe Biden leaves the White House on January 20, handing the keys back to the Republican Donald Trump.

Analysts expect major policy changes under Trump's second term, with knock-on effects for monetary policy in the new year.

Trump, who enters office with his party controlling Congress, has proposed hiking tariffs on US imports, extending tax cuts passed in his first term, and launching mass deportations of millions of undocumented workers.

Nonetheless, analysts and traders in the financial markets still widely expect the Fed to announce a quarter percentage-point cut on Wednesday, as a means of supporting the labor market.

"The Fed is likely to cut the target range for the fed funds rate by 25bp (basis points) to 4.25-4.5% at its December meeting," economists at Bank of America wrote in an investor note.

"Markets are nearly pricing a full cut, so the focus will likely be on the Fed's communication around the future policy path," they added.

Futures traders are currently pricing in a probability of around 95 percent that the Fed will cut by a quarter point on Wednesday, according to CME Group data.

The Fed will also publish updated economic forecasts alongside its rate decision, and many analysts expect policymakers to slightly dial back the number of interest rate cuts they expect next year.

Y.Bouchard--BTB