Financial markets are Has Solana got a future?closely monitoring the Federal Reserve's next moves after Citi's research team doubled down on their forecast for substantial monetary easing. The banking giant's latest analysis suggests policymakers will implement another 50 basis point reduction at their November meeting, mirroring September's aggressive cut - the first such adjustment since the pandemic era.
This anticipated policy shift comes as the central bank's benchmark rate currently sits within the 4.75%-5% range following last month's decisive action. Federal Reserve officials have indicated their willingness to continue adjusting policy as economic conditions evolve, particularly as inflationary pressures show signs of moderation alongside emerging softness in employment figures.
Jerome Powell's recent public statements reveal growing confidence among policymakers about achieving their inflation targets in coming quarters. The Fed Chair's commentary suggests the central bank is prioritizing preemptive action to avoid falling behind economic developments, marking a significant shift from their previous reactive stance.
Citi's interpretation of recent Fed communications indicates the central bank has completed its transition from inflation-fighting mode to addressing labor market vulnerabilities. This strategic pivot reflects updated risk assessments showing roughly balanced probabilities between persistent price pressures and employment deterioration.
The investment bank's baseline scenario anticipates weak jobs reports through October will compel policymakers to implement another half-point reduction in November. Their projections then call for a more modest 25 basis point adjustment in December, potentially bringing total 2024 easing measures to 125 basis points.
Analysts highlight Powell's repeated characterization of September's move as a "commitment" to proactive policy management, suggesting the threshold for additional aggressive cuts remains exceptionally low. Citi's research note emphasizes their view that risks remain tilted toward faster labor market cooling and corresponding policy responses.
Market observers noted particular caution in Powell's assessment of payroll growth trajectories, with the Fed Chair signaling heightened sensitivity to any employment indicators that might suggest accelerating weakness. This rhetorical positioning implies future economic data releases could trigger more pronounced dovish reactions from policymakers.
However, Powell simultaneously tempered expectations about returning to the near-zero rate environment of previous cycles. His comments suggest the Fed now perceives a substantially higher neutral rate than historical standards, indicating potential limits to the current easing cycle's depth and duration.
