GTC Chief Analyst Jameel Ahmad Appears on FRANCE24 | Fed Prepares for First Rate Cut in Four Years

Summary: The Federal Reserve is expected to implement its first interest rate cut in four years, a decision that has captivated global markets and sparked debate over the scale of the cut. Jameel Ahmad, Chief Analyst at GTC FX, highlighted that expectations for a rate cut have been building for nearly a year, ever since the Fed signaled the possibility in October 2023. Initially expected in June, the decision was postponed to September. Now, the key question is the size of the rate cut.

Some argue that the Fed has acted too late, especially when compared to the European Central Bank and the Bank of England, which have already cut rates. On the other hand, some analysts point out that the U.S. economy has performed well over the past 18 months, with inflation nearing the 2% target, giving the Fed confidence to proceed with a rate cut.

Market tensions are palpable, with differing reactions expected depending on whether the rate is cut by 0.25% or 0.5%. As the U.S. economy shows signs of slowing down, some are hoping for a larger cut to boost confidence, while others believe a 0.25% reduction would suffice.

Beyond the rate cut itself, the Fed's communication will be closely watched. Markets are eager to gauge the Fed's control over long-term rates and whether it expresses concern. If concerns are voiced, it could signal more rate cuts in the future, potentially extending into 2025, which would imply the Fed has fallen behind in its actions.

As a leader among global central banks, the Federal Reserve's decision will have far-reaching consequences for global markets. As the rate cut decision draws near, markets worldwide are anxiously awaiting this pivotal moment.