On Wednesday in Washington DC, the Federal Open Market Committee (FOMC) is widely expected to cut its main policy rate for a second consecutive meeting, even as it makes decisions based on a limited flow of economic data.

Virtually all respondents in the latest economists’ poll forecast a 25bp cut at the end of the two-day meeting, taking the federal funds rate to a 3.75%–4.00% range. In September, the Fed resumed its easing cycle with a similar reduction. Markets are pricing in a further quarter-point cut in December.  

“The Fed has indicated that it will cut rates by 25bp,” said Aditya Bhave, US economist at BofA Global Research. “We also expect the FOMC to announce an end to balance sheet runoff. The Fed will likely acknowledge the recent strength in economic activity, but the broader shift in focus toward the labour mandate probably won't change.” (LS – Continue Reading)

Of the two North American central bank decisions on Wednesday, the Bank of Canada announcement is expected to be the more contentious. The Governing Council is widely anticipated to lower its overnight rate by 25 basis points to 2.25%.

JP Morgan’s Bennett Parrish argued that the case for further easing rests largely on evidence that economic activity has continued to soften through the second half of the year. “Despite a surprising rebound in employment in the September labour force survey, job losses persisted in trade-exposed sectors and the unemployment rate held at a cycle-high 7.1%—prompting [BoC Governor Tiff] Macklem to characterise the labour market as ‘soft’,” he said. 

The most recent inflation data tested the resolve of the bank’s doves after hotter-than-expected September data. Headline CPI rose to 2.4%, two tenths above forecasts and up from 1.9% previously. Core inflation readings were mixed: the median measure climbed to 3.2% y/y, while the trim measure rose to 3.1% y/y, both marginally above expectations. (LS – Continue Reading) 

US Treasury Secretary Scott Bessent called on Japan’s new government to give the nation’s central bank the space to combat inflation — marking a stark contrast with his message at home for the Federal Reserve.

“The Government’s willingness to allow the Bank of Japan policy space will be key to anchoring inflation expectations and avoiding excess exchange rate volatility,” Bessent said in a social media post Wednesday. (BBG – Continue Reading) 

Australia’s consumer prices rose 3.2% in the third quarter, the strongest gain in more than a year, the Australian Bureau of Statistics said Wednesday. 

  
The increase exceeded the 2.1% rise seen in the second quarter and was above the 3% forecast by economists polled by Reuters. 

The figure also pushed inflation beyond the Reserve Bank of Australia’s 2%–3% target band for the first time since the second quarter of 2024, underscoring the challenge policymakers face in curbing persistent price pressures. (CNBC – Continue Reading)