LIVE MARKETS-Fed voter calculation points to December cut

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FED VOTER CALCULATION POINTS TO DECEMBER CUT

Markets have swung their pricing for Federal Reserve interest rate policy back in favor of an interest rate cut next month, after more hawkish testimony from some Fed officials briefly led traders to bet against a rate reduction.

The shift back to a cut comes as New York Fed President and Vice Chair of the Federal Open Market Committee John Williams said on Friday that the U.S. central bank can still cut interest rates "in the near term" without putting its inflation goal at risk.

Traders are now pricing 77% odds of a December cut, according to the CME Group’s FedWatch Tool.

“Support for a cut by John Williams… appears to be the primary factor in the huge swing in sentiment,” Chris Low, chief economist at FHN Financial said in a report, noting that he sees “five clear doves and four clear hawks” among the Fed’s 12 voters.

Low notes that a few days ago Chicago Fed President Austan Goolsbee “was leaning hawkish but insisted he had not made up his mind.”

Williams and Fed Chair Jerome Powell are the other two officials who will decide the outcome; however, Low notes that Williams and Goolsbee are not likely to split from Powell, and Powell as the chair is unlikely to dissent from the majority.

“Hence, with Williams indicating support, it looks like 8-4 in favor of another 2025 cut,” Low concludes.

(Karen Brettell)

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