Hope versus reality: That’s the mood among market watchers as we count down to the Fed’s interest rate decision.
Construction work is done around the Federal Reserve building on September 17, 2024 in Washington, DC.This report is from today's CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribeThe Federal Open Market Committee meeting wraps up Wednesday U.S. time, and the Federal Reserve will announce its decision on monetary policy.
Right now, data indicates the U.S. economy's in good shape, albeit not as robust as it was a year ago. A Tuesday report showed retail sales rose 0.1% in August, beating the 0.2% decline expected by a Dow Jones survey. In other words, consumers, who prop up the U.S. economy, are still going strong. Without any warning signs flashing red, it's difficult for the Fed to justify lowering rates by more than a quarter point.
But we can't ignore the fact that rates are at a 23-year high. They're stifling the labor market and small businesses. More importantly, inflation, which is why such high rates were implemented in the first place,"They have achieved their mandate for full employment and inflation back at target," said Mark Zandi, chief economist at Moody's Analytics. "I hope they cut 50 basis points."Perhaps investors shouldn't focus too much on the Fed's first cut.
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