UBS CIO: The escalating US election fever increases the possibility of the Fed maintaining interest rates unchanged
The escalating US election may increase the possibility of the Federal Reserve keeping interest rates unchanged. The Chief Investment Officer of Mercer Investment Solutions stated that there is an increasing likelihood that the Federal Reserve will maintain interest rates until the end of the year, rather than getting involved in the increasingly intense US election competition. He believes that with solid economic growth, good employment conditions, and well-performing inflation, the Federal Reserve may choose to maintain the status quo. Last month, Trump stated that if re-elected, he would let Powell complete his term. Mercer will convene clients in Melbourne to participate in the Pacific Global Investment Forum, with political changes being one of the main focus areas for investment
According to the Zhitong Finance and Economics APP, the Chief Investment Officer of Mercer Consulting stated that the Federal Reserve is increasingly likely to maintain interest rates unchanged until the end of the year, rather than getting involved in the increasingly intense U.S. presidential election.
Hooman Kaveh said in an interview on Tuesday: "If you were a Fed governor, you might want to say, 'Let's maintain the status quo and keep interest rates unchanged until the end of the election.'"
Kaveh indicated that the asset management company still expects the U.S. to cut interest rates twice before the end of this year. However, he pointed out that with Biden withdrawing from the race, Republican candidate Trump may face off against Harris, which could change the situation.
"Economic growth is stable, employment conditions are good despite a slight decline in trend, and inflation is also performing well," Kaveh said. "As long as things look fine and the Fed's current policies are not exerting excessive pressure on any specific domestic or international factors, I think they may choose to stand aside."
In an interview last month, Trump stated that if re-elected, he would let Powell complete his term, which would last until May 2026.
Mercer is a subsidiary of the consulting and insurance company Willis Towers Watson, managing $379 billion in assets globally. Kaveh mentioned that Mercer will convene clients in Melbourne this week to participate in the Pacific Global Investment Forum, with political change being one of the main focus areas for investment.
He said: "The Fed will hope to minimize interference in the election process that is clearly controversial."