US election imminent - JP Morgan says Fed to pause rate cuts on a Trump win

You all set for the US election? In the interests of 'what to expect', this summary of an interview with an analyst at JP Mrgan Asset Management on scenarios under a Harris and Trump win.Expects higher rates under Trump, citing more expansionary fiscal policy:"If you have a Republican sweep with the Trump victory, you will get much more expansionary fiscal policy, potentially a trade war, bigger deficits, and so higher interest rates"On the Federal Reserve:If it looks like fiscal policy is going to add to the deficit, and add to fiscal stimulus, and add to inflation, they may feel that, well, if fiscal policy is going to be expansionary, we're going to have to lean against that and slow off the easing"If it's a Harris win:"If you have a divided government with, say, a Harris victory, then I think you have a continuation of this slow, extended soft landing economy, but kind of dull" Fed likely to "stick to their dot plot until the economy tells them not to"JPMAM stick to a November rate cut, 25bp, regardless of the winner. This article was written by Eamonn Sheridan at www.forexlive.com.

Nov 4, 2024 - 10:00
0
US election imminent - JP Morgan says Fed to pause rate cuts on a Trump win

You all set for the US election? In the interests of 'what to expect', this summary of an interview with an analyst at JP Mrgan Asset Management on scenarios under a Harris and Trump win.

Expects higher rates under Trump, citing more expansionary fiscal policy:

  • "If you have a Republican sweep with the Trump victory, you will get much more expansionary fiscal policy, potentially a trade war, bigger deficits, and so higher interest rates"

On the Federal Reserve:

  • If it looks like fiscal policy is going to add to the deficit, and add to fiscal stimulus, and add to inflation, they may feel that, well, if fiscal policy is going to be expansionary, we're going to have to lean against that and slow off the easing"

If it's a Harris win:

  • "If you have a divided government with, say, a Harris victory, then I think you have a continuation of this slow, extended soft landing economy, but kind of dull"
  • Fed likely to "stick to their dot plot until the economy tells them not to"

JPMAM stick to a November rate cut, 25bp, regardless of the winner. This article was written by Eamonn Sheridan at www.forexlive.com.

Read More