The US Federal Reserve faces its rate meeting today with reasons for caution

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The market assumes that there will be no movement in interest rates and they will remain between 5.25 and 5.5%, but the organization is at the crossroads between good economic data and market difficulties.

The US Federal Reserve (Fed) faces a key question: has the time come to end interest rate hikes?

The consensus among investors seems to be that the central bank will decide at its meeting today to keep rates at their current range, between 5.25 and 5.5%, according to the CME group's FedWatch tool.

For now, "the downward trend (in inflation) is intact and should allow the Fed to step back from considering additional increases, and perhaps consider some preventive cuts as early as late spring/summer 2024" , according to the analysis of Loomis Sayles, a specialized manager at Natixis Investment Managers.

The group believes that the Federal Reserve "is pulling back somewhat on the appreciation of longer-dated US Treasuries and appears to have become more cautious about excessive tightening."

More cautious is Cristina Gavín Moreno, head of fixed income at Ibercaja Gestión, who assures in a comment prior to the two-day Fed meeting that "the change in bias in the Federal Reserve's monetary policy is still far away and not "we are likely to see a rate cut before the end of 2024."

Since the last monetary policy meeting in September, in which central bankers also left rates unchanged, incoming data has shown stronger-than-expected employment growth, stronger-than-expected economic growth and only a slow moderation of inflation which, at 3.4% in September according to the Fed's preferred indicator, remains well above the target.

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