Federal Reserve Plans Third Interest Rate Cut of 2023

The Federal Reserve is expected to cut interest rates for the third time in 2023, with traders anticipating a 0.25% reduction, consistent with previous cuts. This decision comes amid a significant data blackout due to a federal government shutdown, leaving the Fed's Open Market Committee with limited information to assess the economy.

The Bureau of Labor Statistics has canceled the October jobs report, and the November report is delayed, set to be released on December 16. Meanwhile, consumer spending remained flat in September, with personal consumption expenditures rising slightly to 2.8% in September from 2.7% in August.

In the labor market, the ADP reported that small businesses lost 120,000 jobs in November, contributing to a net loss of 32,000 jobs nationwide. Wells Fargo's CEO, Charlie Scharf, noted that while business customers are managing, they face short-term pressures from tariffs, affecting hiring and investment.

Similarly, JPMorgan Chase's Marianne Lake described the consumer environment as 'a little bit more fragile,' indicating that while data appears resilient, there is less capacity to withstand additional economic stress.