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Federal Reserve Expected to Cut Rates by 25 Basis Points Amid Internal Divisions

Markets anticipate a reduction to 3.50%-3.75%, while Bank of America forecasts $45B monthly short-term Treasury purchases starting January.

Summary

The Federal Reserve is scheduled to announce its interest rate decision Thursday at 3 a.m., with markets widely expecting a 25 basis point cut, bringing rates to a range of 3.50%-3.75%. The decision comes as rare internal divisions have surfaced within the central bank. Bank of America projects that the RMP (Reserve Market Program) could begin monthly $45 billion purchases of short-term U.S. Treasuries from January.

Terms & Concepts
  • Basis Point: A unit of measure equal to one hundredth of a percentage point, used in interest rate changes.
  • Short-term Treasuries: U.S. government debt securities with maturities of one year or less.
  • Reserve Market Program (RMP): A Federal Reserve initiative that could involve targeted asset purchases, here projected at $45B per month.