Former Cleveland Fed President: fewer rate cuts coming next year

Former Cleveland Fed President Mester said the Fed's rate of interest rate cuts next year will be affected by fiscal policy, the number of times may not be as many as assumed or expected in September. Mester noted that the Fed's outlook will change with the fiscal plans of the incoming Republican administration, and that the market may have correctly predicted that there will be fewer than the four rate cuts that were previously expected. ‘Next year, the pace of rate cuts will be influenced by fiscal policy,’ said economists polled by Reuters, who also expect a 25 basis point cut at the December 2024 meeting. That would bring the federal funds rate down to 3 per cent to 3.25 per cent by the end of 2025, slightly below the Fed's median ‘dot plot’ forecast.