The note from Santander US Capital Markets comes via a Wall Street Journal report (WSJ is gated):
- “The Federal Reserve is an independent central bank, but monetary policy matters to elected officials, which makes the Fed subject, to a degree, to the election calendar,”
- expect the U.S. economy and inflation to remain hotter-than-forecast, supporting a delay in monetary easing
- Fed’s November meeting was moved back by a day, “creating one additional day of separation from the election.”
- Assuming there is a clear winner, “I see the FOMC as free to start a new easing cycle at the November FOMC meeting”
Awesome! Remember at the turn into the new year analysts were falling over each other to forecast 6 or even 7 Federal Open Market Committee (FOMC) rate cuts in 2024? Which was always, well, insane. Now the pundits have dialled it all back to around 3. This from Santander would put a cat amongst the remaining pigeons if it gathers narrative pace.
