Fed and Peers to Push Ahead with Rate Cuts Post-US Election

The upcoming U.S. election on November 5, 2024, is poised to have significant implications for global financial markets, including the potential for central banks to proceed with rate cuts. As the Federal Reserve and its peers navigate the complex landscape of monetary policy, investors are keenly watching for signals that could influence their decisions. This article explores the potential impact of the U.S. election on rate cuts and the broader implications for investors.


The Federal Reserve's recent rate cut decision, coupled with the anticipation of further cuts by central banks worldwide, has sparked interest in how the U.S. election could influence this trajectory. The outcome of the election, particularly the presidency, could shape the economic and political landscape, impacting investors' expectations for future rate cuts.

A Trump victory, for instance, could introduce uncertainty in trade policy and geopolitics, potentially supporting the dollar and weighing on economic growth outside the U.S. This dynamic could lead to a more aggressive rate cut cycle by the Fed to offset the negative impact on economic growth. Conversely, a Harris victory, with its expected policy continuity from the Biden administration, would likely result in a more cautious approach to rate cuts, with less fiscal expansion dampening economic growth expectations.


A divided government, with the opposing party controlling one or both houses of Congress, may not significantly impact the Fed's rate cut decisions. Morgan Stanley economists do not foresee substantial differences in public spending regardless of which party wins the executive branch. This scenario could maintain a status quo in fiscal policy, allowing the Fed to focus on its monetary policy mandate without significant political interference.

However, a divided government may introduce uncertainty and gridlock, potentially influencing the Fed's ability to implement other policy measures. The potential for uncertainty or continuity in trade, fiscal, and monetary policy, depending on the election outcome, could also influence the Fed's rate cut decisions. Investors should closely monitor the election results and their implications for economic and political dynamics to make informed decisions about their portfolios.

In conclusion, the U.S. election holds significant implications for the Fed's rate cut trajectory and the broader investment landscape. As investors await the outcome, they should stay informed about the potential impacts on monetary policy, economic growth, and currency dynamics. By doing so, they can better position their portfolios to navigate the evolving economic and political landscape.