Samoa: The Federal Reserve will continue to cut interest rates in November, focusing on the labor market

The Zhitong Finance App learned that the chief investment officer of Morgan Stanley Wealth Management said that the Federal Reserve will continue to cut interest rates in November, but as inflation stops cooling at an accelerated pace, policy makers are acting cautiously.

Lisa Shalett said that the Federal Reserve is concerned about the labor market, and there is evidence that the labor market is “in mixed condition.”

“They're not going after the 2% (inflation) target; they've given up,” she said.

Last week, most Fed policymakers gave the green light to cut interest rates further in the next few months, while Atlanta Federal Reserve Chairman Bostic said it might be reasonable not to cut interest rates in November.

“The stock market is unaware of this, but as higher inflation expectations are digested, the bond market seems to be starting to rebound in the long run,” Shalett said.

According to data released last week, the US consumer price index (CPI) rose slightly higher than expected in September, and the producer price index (PPI) remained flat.

Traders currently believe that the probability of cutting interest rates by 25 basis points at the Federal Reserve's November 6-7 policy meeting is 89%, abandoning expectations of cutting interest rates by 50 basis points after the release of the September employment report and other optimistic economic data.

Meanwhile, Shalett said that since the two parties are evenly matched, she does not expect a clear outcome on the day of the US presidential election on November 5.

Last week's polls showed that Democratic Vice President Harris and former Republican President Trump are on top of each other in the seven battleground states.

“We encourage customers to anchor their positions on what we call physical assets... including gold, commodities, real estate, energy infrastructure assets,” Shalett said, to “avoid” increasing market volatility.

“We also favor market-neutral hedge fund strategies,” she added.