Divided Fed, uncertain future: Powell’s cautious tone raises questions about policy shifts ahead.

Laurie Mount, Portfolio Manager with RBC GAM’s BlueBay US Fixed Income team, highlights the Federal Reserve's recent rate cut and its impact on cash strategies amid ongoing economic uncertainties.

• The Fed lowered the fed funds rate by 25 basis points to 3.75–4.00%, while signaling caution regarding December cuts due to labor market risks and committee divisions over inflation concerns.
• Fed Chair Powell warned against assuming another rate cut soon, citing a lack of data due to the government shutdown, which has already led markets to cut December rate cut predictions significantly.
• In response, our team is prioritizing floating-rate securities and short-term fixed-rate assets under one year, vigilantly analyzing Fed communications and economic data to adapt to evolving conditions.