Federal Reserve Interest Rate Decision

The Federal Reserve is set to announce its interest rate decision on Nov. 7. Currently, officials are in a blackout period and are not making public statements.

According to CME Group's FedWatch Tool, markets are anticipating a 95% chance of a rate cut by 25 basis points, reducing the rate from the current 4.75%-5% range following the upcoming two-day meeting.

The Fed previously cut rates by 50 basis points in September to support the labor market amid diminishing inflationary pressures. Recent data indicates a decline in inflation while job demand remains resilient.

An inflation metric that the Federal Reserve closely monitors showed a slowdown in growth. The personal consumption expenditures price index rose by 2.1% annually in September, down from 2.3% in August. This aligns with economists' forecasts. On a monthly basis, the index accelerated slightly to 0.2%, matching projections.

The core metric, excluding volatile items like food and fuel, reported a 2.7% annual rate, surpassing the expected 2.6%. Monthly, it also rose to 0.3% as predicted.

Additionally, data from the Commerce Department revealed core PCE at 2.2% in Q3, easing from 2.8% before but exceeding expectations of 2.1%. The headline PCE rate dropped to 1.8%.

In terms of job growth, the US economy added only 12,000 jobs in October, significantly lower than the predicted 106,000, impacted by recent hurricanes and labor disputes. First-time unemployment claims decreased to 216,000 from 228,000 the previous week. Meanwhile, private payrolls surged to 233,000, suggesting labor market resilience despite recent disruptions. The final nonfarm payrolls report is expected on Friday, coinciding with the crucial pre-election period.

According to a poll from the Associated Press-NORC Center, many Americans perceive the economy as poor, especially with ongoing concerns regarding high food and housing costs.

Despite indications of falling inflation and solid wage growth, the US economy grew at a slower rate than expected in Q3, according to the Commerce Department's preliminary GDP estimate. Wells Fargo analysts noted that recent economic activity has generally surpassed expectations, indicating ongoing resilience.