The last few trading days were characterized in particular by the eagerly awaited Fed meeting and the subsequent FOMC press conference with Jerome Powell.
In view of declining concerns about the bursting of a possible AI bubble, hopes of a year-end rally are likely to remain. In addition, the upcoming publication of US labor market data could already be casting its shadow.
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„JOLTs“ slightly higher than expected - interest rate band in the USA now at 3.50 to 3.75 percent
The US labor market provided impetus on Tuesday with the so-called „JOLTs“ (Job Openings and Labor Turnover Survey). Job openings totaled 7.685 million units on the last working day of September, down from 7.67 million in October, according to the Bureau of Labor Statistics (BLS).
As expected, the US Federal Reserve (Fed) tightened the interest rate screws by a quarter of a percentage point last Wednesday, bringing the interest rate band to between 3.50 and 3.75 percent.
However, due to the 43-day budget freeze, the Fed had to rely on estimates from private houses and its own surveys. The central bank still has to master the difficult balancing act of getting inflation under control without stalling the economic engine.
A key interest rate that is too high can slow down the economy. Although low interest rates could ensure growth, they could fuel inflation.
For the coming rate cuts, however, Powell signaled a possible pause in the easing course, pointing to clearer signals from the labour market. „I would note that after cutting 75 basis points since September and 175 basis points since September of last year, the federal funds rate is now within a wide range of estimates of its neutral value,“ Powell said. „Monetary policy is not locked into a particular course, and we will make our decisions on a meeting-by-meeting basis.“
The Fed is scheduled to meet in the new year on January 28 and March 18, 2026 to decide on the future interest rate level.
Fed adjusts growth and inflation forecasts
The Fed also issued new growth forecasts for the coming year. For 2026, the monetary watchdog now expects median growth of 2.3%, up from 1.8% in September. Expectations for the economy in 2025 climbed to 1.7 percent, up from 1.6 percent previously.
Despite Trump's tariff policy, inflation is expected to reach 2.4% in 2026 (previously: 2.6%). The estimate for the current year is 2.9 percent, compared to 3.0 percent previously.
German inflation remains at 2.3 percent
According to the latest figures, the inflation rate in the Federal Republic of Germany was 2.3% compared to the same month last year, as announced by the Federal Statistical Office on Friday, confirming a previous estimate. In October, price pressure was also at 2.3 percent, after 2.4 percent in September.
Investors are now eagerly awaiting the non-farm payrolls for October and November, which are expected next Tuesday.
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