Federal Reserve to Make Interest Rate Decision Days After Trump Election

Historical Context and Market Outlook

The Federal Reserve is widely expected to raise interest rates by 25 basis points at its meeting on Wednesday, November 8, just two days after the US presidential election. This would be the second rate increase of the year, following a quarter-point hike in March. The Fed has been gradually raising rates in an effort to combat inflation, which has been running above the central bank's target of 2% for much of the past year.

The decision comes at a time of heightened uncertainty in the financial markets, as investors grapple with the potential impact of the election and the Fed's policy tightening. The election is seen as a toss-up between Democratic candidate Hillary Clinton and Republican candidate Donald Trump, and the outcome could have a significant impact on the economy and financial markets.

Market Predictions and Implications

The markets are currently pricing in a 90% chance of a rate hike on Wednesday. If the Fed does raise rates, it would be a signal that the central bank is confident in the economy's ability to withstand higher borrowing costs. This would likely be seen as a positive sign by investors, and could help to boost stock prices and other risk assets.

However, if the Fed decides to hold off on raising rates, it would likely be seen as a sign that the central bank is concerned about the economy's ability to handle higher borrowing costs. This could lead to a sell-off in stocks and other risk assets.

The Fed's decision will be closely watched by investors around the world, and could have a significant impact on the global economy.

Conclusion

The Federal Reserve's interest rate decision on Wednesday will be one of the most important economic events of the year. The decision will come just two days after the US presidential election, and could have a significant impact on the economy and financial markets.