Welcome back. Two members of the Fed descending during this week's rate cut decision. Governor Steven Myron arguing for a half a point cut while Kansas City Fed President Jeffrey Schmidt said rates should have been left unchanged.So now we're getting some breaking news as to why Schmidt descended. CNBC senior economics reporter Steve Leeman has the news for us. Steve, >> hey, good morning David.Yeah, Kansas City Fed President Jeffrey Schmidt explaining his descent this morning, joined in separate remarks by ...

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Monetary Policy - The Federal Reserve decided to end its balance-sheet runoff after a drop in bank reserves [1] - Officials are focusing on the federal funds rate as the main tool for monetary policy [1] - The federal funds rate will also help assess liquidity in the financial system [1]

Core Insights - Federal Reserve Chair Jerome Powell's indication that another rate cut in December is "not guaranteed" has created uncertainty in the markets, particularly affecting Bitcoin's typical response to rate cuts [1][3][7] - The Federal Reserve's recent rate cut of 25 basis points, the second consecutive cut, aims to support a slowing U.S. economy, but divisions within the Federal Open Market Committee regarding future cuts have emerged [2][4][5] Monetary Policy Impact - Powell's comments reflect a lack of consensus among Fed members on the pace of monetary easing, with some advocating for more aggressive cuts while others caution against rapid reductions due to ongoing inflation concerns [4][5] - The probability of a December rate cut has significantly decreased, dropping to about 56% from nearly 90% the previous day, which has led to fluctuations in U.S. equities [6] Bitcoin Market Reaction - Bitcoin's historical tendency to rally during Fed rate cuts may be challenged this cycle due to the uncertainty surrounding future monetary policy [7][8] - Analysts suggest that Bitcoin's recent upward movement, which began from a low of $103,530 on October 17, is showing signs of fatigue and remains within a constrained upward channel [9]

Monetary Policy Stance - The ECB decided to keep the three key interest rates unchanged [1][24] - The ECB will follow a data-dependent and meeting-by-meeting approach to determine the appropriate monetary policy stance [3][24] - The ECB is not pre-committing to a particular rate path [3][25] Inflation Assessment - Inflation remains close to the 2% medium-term target [1][2][13][14][24] - Annual inflation increased to 2.2% in September, up from 2% in August, mainly due to energy prices [11] - Inflation excluding energy and food rose to 2.4% from 2.3% in August [12] Economic Outlook - The economy grew by 0.2% in the third quarter [4] - Unemployment at 6.3% in September remains close to its historical low [6] - Bank lending rates for firms averaged 3.5% in August [21] - The average interest rate on new mortgages stood at 3.3% in August [23] - Growth in mortgage lending ticked up to 2.6% in September from 2.5% in August [23] Risks and Uncertainties - Ongoing global trade disputes and geopolitical tensions create uncertainty [2][16] - A volatile global trade environment could disrupt supply chains and dampen exports [15] - Geopolitical tensions, particularly Russia's war against Ukraine, remain a major source of uncertainty [16]

Core Viewpoint - The European Central Bank (ECB) has maintained its key interest rate at 2% for the third consecutive meeting, indicating that inflation is under control and European businesses are managing the impact of higher U.S. tariffs better than expected [1][7]. Economic Growth and Competitiveness - Despite a modest growth outlook, concerns about Europe's economic competitiveness are rising, particularly in light of increasing competition from China and higher U.S. tariffs [3][4]. - Recent surveys indicate a modest upswing in European business activity at the start of the fourth quarter, with a growth of 0.2% in the third quarter compared to the previous quarter and a 1.3% increase year-over-year [6]. Inflation Control - Inflation was recorded at 2.2% in September, slightly above the ECB's target of 2%, leading analysts to suggest that the ECB may not change rates again until next year [7]. Monetary Policy Stance - The ECB's current stance contrasts with the U.S. Federal Reserve, which has recently cut rates to support growth amid elevated inflation [8]. - ECB President Christine Lagarde emphasized that while the monetary policy is in a good place, it is not fixed, and future decisions will be data-driven [5].

Key TakeawaysThe Bank of Japan (BOJ) maintained its short-term policy interest rate at 0.5%, a widely anticipated decision that leaves investors awaiting further signals on monetary tightening amid persistent inflation.European markets opened positively, with the EuroStoxx 50 (SX5E) up 0.4% and the DAX (DAX) gaining 0.5%, reflecting a mixed but generally optimistic sentiment following recent corporate earnings and ahead of key US-China trade talks.US stock futures for the Nasdaq (IXIC) and S&P 500 (SPX) edg ...

Monetary Policy - The market anticipates at least three or four rate cuts, contrasting with the rate hike expectations in 1999 [1] - Monetary policy is expected to lead to real interest rates of zero or less [2] Fiscal Policy - Unlike the budget surplus in 1999-2000, the current budget deficit is at 6% [2] - The combination of current fiscal and monetary policies is unprecedented since the post-war period, specifically the early 1950s [2] Market Comparison - The current situation is potentially more explosive than in 1999 due to the shift from expected rate hikes to rate cuts [1]

Market Performance - Nasdaq closed in the green, while the S&P was nearly unchanged and the Dow was down more than 70 points [1] - Nvidia became the first company to hit a $5 trillion valuation, up nearly 15% in the last five trading sessions [1] - Adidas shares dropped more than 10% due to weak sales in North America [1] - Gold settled back above $4,000 but pulled back in the last few hours [1] Federal Reserve (The Fed) Actions and Stance - The Fed cut interest rates by a quarter point, bringing the new range to 375 to 4% [4] - Fed Chair Powell signaled a more neutral stance on a December rate cut, disappointing markets [4] - Traders are pricing in a 30+% chance that rates will remain unchanged at the central bank's final meeting of 2025 [3] - The probability of a rate cut in January rose from 42% to 80% after the press conference [5] - Two descents occurred during the vote: one wanted a 50 basis point rate cut, and the other favored no rate change [7] Economic Indicators and Concerns - The Fed noted reasonably strong economic growth and a booming stock market [6] - The Fed is assessing whether it has taken out enough insurance against a potential weakening in the job market [9] - Inflation is still high, and core PCE is going up [15] - The market may be overly optimistic about future rate cuts, as the Fed indicated that unless data weakens meaningfully, they are not cutting in December [14]

In the near term, risks to inflation are tilted to the upside and risks to employment to the downside. A challenging situation. There is no risk-free path for policy as we navigate this tension between our employment and inflation goals.Our framework calls for us to take a balanced approach in promoting both sides of our dual mandate. With downside risks to employment having increased in recent months, the balance of risks has shifted. Accordingly, we judged it appropriate at this meeting to take another st ...