The Fed voted to cut its key policy rate by another 25bp earlier this week, but it is deeply split over what to do next. Close to one-third of the FOMC is projecting another rate cut before year-end, while close to another third disagreed with this week’s rate cut. Further illustrating that split, two officials – Esther George and Eric Rosengren – voted for no change while another – James Bullard – voted for a 50bp cut. Our view is still that the FOMC will cut the fed funds rate by a final 25bp in December, to between 1.50% and 1.75%, although the futures market expects the Fed to go a little further – with another one to two rate cuts priced in for next year.
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