BNY's Vincent Reinhart: Expecting another rate cut in December, but vote likely to be split

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BNY's Vincent Reinhart: Expecting another rate cut in December, but vote likely to be split

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Expects Fed rate cut in December and sees rates going down due to concerns about economic activity, though warns of potential adverse market reaction from poorly explained cut

Asks if Fed will not cut in December

Host
Vincent Reinhart

Expects Fed to cut in December, argues little has changed since September projections to justify no cut

FOMC participants' views on economic activity and inflation should be about the same as September SEP
Notes Fed officials seem nervous and potentially political

Host
Vincent Reinhart

Explains FOMC split between 10 members wanting more cuts and 9 thinking they've done enough

September SEP median showed 3 cuts tipped by one vote; now at 2 cuts with dissent from President Schmidt
Raises inflation concerns and upside risks

Host
Vincent Reinhart

Acknowledges inflation concerns but sees public Fed discussions as internal persuasion efforts

FOMC participants don't meet much between meetings; public talking is them trying to convince each other
Asks about danger of adverse market reaction like mortgage rate rise during previous cut cycle

References uncertainty from tariffs during previous cutting cycle

Host
Vincent Reinhart

Warns December cut may not be well explained due to dissents, potentially causing adverse market reaction

Hard for Chair Powell to make positive case for supporting economic activity while achieving inflation goal
Questions focus on December given new Fed voting members and chair in 2025

Market expects more cuts with new leadership

Host
Vincent Reinhart

Forecasts rates going down due to economic activity concerns, but 2025 depends on political appointments

If White House appoints majority on Fed Board, they can control FOMC and rates could go down significantly

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