The Federal Reserve may opt to maintain its current interest rate policy through the end of the year amid the intensifying U.S. election cycle, according to Hooman Kaveh, Chief Investment Officer at Mercer LLC. In a recent Bloomberg Television interview from Melbourne, Kaveh suggested that Federal Reserve governors might prefer to “stay as we are” and refrain from adjusting rates until after the presidential election.
Despite Mercer’s forecast of two anticipated rate cuts by the end of the year, Kaveh acknowledged that this outlook could shift given recent political developments. With President Joe Biden exiting the race and Republican nominee Donald Trump potentially facing Kamala Harris, the political landscape could influence Federal Reserve decisions.
Kaveh highlighted that current economic indicators are stable, with solid economic growth, manageable employment trends, and controlled inflation. He indicated that as long as the Fed’s existing policies do not exert undue pressure on domestic or international factors, the central bank might find it prudent to maintain its current stance.
Last month, Trump assured in a Bloomberg interview that, if re-elected, he would permit Jerome Powell to complete his term as Fed Chair, which is set to run through May 2026.
Mercer, a global asset manager with $379 billion in assets under management, is hosting its Pacific Global Investment Forum in Melbourne this week. The forum is expected to address political changes as a significant concern for investors, Kaveh noted.
“The Fed will aim to minimize any interference as the election approaches, which is bound to be contentious,” Kaveh added.
