The US Federal Reserve is expected to lower borrowing costs today, but investors are focused on the central bank’s future leadership and plans for its vast asset portfolio.
Futures markets have priced in a 99.9% likelihood of a 25-basis-point cut, so economists are instead watching for clues over whether the bank ends its “quantitative tightening” program sooner than forecast.
QT has seen the Fed shrink its balance sheet by letting securities bought during the financial crisis and the pandemic mature without replacement; shutting it would have major implications for short-term rates.
Also in question is who will succeed the Fed’s chair: Jerome Powell has faced huge political pressure, and the Trump administration now has a shortlist for his replacement.
