Federal Reserve Likely to Hold Rates Amid US Election Turmoil

The Federal Reserve may choose to hold interest rates steady until the end of the year, avoiding involvement in the intensifying US election race, according to Hooman Kaveh, Mercer LLC chief investment officer. 

This decision comes as the political landscape heats up, with President Joe Biden stepping down from the election and Donald Trump preparing to face Kamala Harris.

Despite expectations for two U.S. rate cuts by year-end, Kaveh notes that current economic conditions — solid growth, stable employment, and controlled inflation — might encourage the Fed to maintain its current stance. 

“As long as things look okay, which they seem to do, and the Fed’s current policy is not putting undue pressure on any particular domestic or international factors, then I think they’re probably comfortable to sit tight,” he said.

With Mercer managing $492 billion globally and gathering clients for its Pacific Global Investment Forum in Melbourne, the interplay between political changes and investment concerns will be a focal point. Kaveh emphasized that the Fed will likely aim to minimize interference during the contentious election period.

For more information, read the full article on Bloomberg.