Here's what every major Wall Street economist thinks the Federal Reserve will do today

Published Wed, Oct 30 20199:57 AM EDT

Most major Wall Street economists expect the Federal Reserve to cut its key interest rate by a quarter point at the conclusion of its two-day meeting on Wednesday, but they differ on what the central bank will signal about its future policy. If the Fed does cut, it will be the third time this year following rate cuts in September and July . Economists, strategists, and Fed watchers alike will also be parsing the Fed's statement and Chairman Jerome Powell's subsequent press conference for comments on what the Fed may do going forward. Here's what Wall Street economists expect from the Federal Reserve meeting: "We expect the FOMC to cut the fed funds rate target range by 25bp, to 1.50-1.75%, with assurances that it 'will act as appropriate to sustain the expansion.'" Morgan Stanley said. The phrase "will act as appropriate to sustain the expansion," is one that Chairman Powell has used before to signal that the Fed is prepared to cut interest rates deeper if the economy continues to slow. If there is a rate cut at the October meeting, don't expect any more this year according to Goldman Sachs. "We expect the FOMC to deliver a third and final 25bp rate cut," they said. But Morgan Stanley thinks they will leave the door open. "Chair Powell should avoid signaling a pause lest financial conditions tighten materially," the firm's economists wrote. "The statement and the press conference should maintain the ready-to-act-as-necessary message." Bank of America "We expect the Fed to cut another 25bp at the upcoming meeting, bringing rates to a range of 1.50-1.75%. This would mark the third 25bp cut in this cycle. A cut would not come as a surprise, since it is largely priced into the markets. Instead, the focus will be on the language of the statement and the post-meeting press conference. We think the FOMC will keep its options open when it comes to additional easing." Evercore ISI "We think the Fed is all but certain to cut interest rates for a third time this year at the October FOMC meeting. The action will all be in the signal the Committee sends about its appetite to do more. We do not expect a so-called 'dovish cut' that encourages investors to add to expectations of additional easing or a so-called 'hawkish cut' that smacks of three-and-done." Goldman Sachs "We expect the FOMC to deliver a third and final 25bp rate cut at the upcoming meeting. Strong signaling from Fed leadership indicates that the modest trade war de-escalation since September has not deterred them from completing a 75bp, 1990s-style 'mid-cycle adjustment.'" Morgan Stanley "We expect the FOMC to cut the fed funds rate target range by 25bp, to 1.50-1.75%, with assurances that it 'will act as appropriate to sustain the expansion.' .. .While we believe post-October is an appropriate time to take a breather, Chair Powell should avoid signaling a pause lest financial conditions tighten materially. The statement and the press conference should maintain the ready-to-act-as-necessary message." UBS "We expect another 25 bp cut from the FOMC next week. The arguments for rate cuts at recent FOMC meetings were uncertainty from trade weighing on investment, weak global growth, and low inflation. All of those arguments remain, Powell clearly wants to cut a gain, and the data should allow him to do so. Businesses have slowed hiring, cut investment, global growth has slowed further, and inflation remains low. Finally, there has been no pushback prior to the blackout period to unwind the market's consistently high probability of a cut." J.P. Morgan "At the conclusion of [this week's] FOMC meeting we expect the Committee will lower the target range for the federal funds rate by 25bp to 1.50-1.75%, consistent with market expectations. Over the intermeeting period Fed leadership did little to push back against these expectations, but rather continued to highlight the lingering downside risks to growth. We believe the post-meeting statement will be a little more hawkish than the July and September statements, perhaps observing that the three cuts cumulatively have served to balance risks to the outlook." Deutsche Bank "We expect the Fed to reduce rates for the third straight meeting, lowering the target range for the fed funds rate by 25bps to 1.5-1.75%. With incoming data since the September FOMC meeting generally underperforming expectations, revisions to the statement language about recent developments should skew in a slightly dovish direction. In terms of forward guidance, the statement should retain the Committee's commitment to "act as appropriate to sustain the expansion." Morgan Stanley "We expect the FOMC to cut the fed funds rate target range by 25bp, to 1.50-1.75%, with assurances that it "will act as appropriate to sustain the expansion. .. .While we believe post-October is an appropriate time to take a breather, Chair Powell should avoid signaling a pause lest financial conditions tighten materially. The statement and the press conference should maintain the ready-to-act-as-necessary message." HSBC "We believe that a majority of the Committee is still inclined to deliver on the third part of the 'mid-cycle adjustment' that Fed Chair Jerome Powell has repeatedly alluded to ever since the first 25bp rate reduction back in July. The 25bp cut that we anticipate at the upcoming 29-30 October meeting would take the federal funds target range down to 1.50-1.75%. However, we expect Kansas City Fed President Esther George and Boston Fed President Eric Rosengren to dissent for the third consecutive meeting, in favor of an unchanged policy rate." Wells Fargo "This meeting really comes down to two options with respect to rates: cut or no cut? Though it is a close call, we suspect the most likely outcome for [this] week's meeting is that the FOMC will cut the fed funds rate another 25 bps, while continuing to emphasize risks to the outlook from global growth and trade policy and acknowledging that inflation remains below target. In the event of a cut in October, a fourth rate cut in December would likely not be needed." Citi "We expect the Fed to cut by 25bp at the October FOMC meeting on Wednesday, in line with Citi's US economists and market pricing. We also expect Fed Chair Powell to provide neutral and limited guidance about future easing, reiterating that the outlook is benign but risks remain and that the Fed would act appropriately to sustain this expansion. Market pricing of Fed easing has receded somewhat but we expect markets to interpret such Fed messaging still slightly hawkishly."

Federal Reserve Chair Jerome Powell holds a news conference following the Federal Reserve's two-day Federal Open Market Committee Meeting in Washington, July 31, 2019.

Sarah Silbiger | Reuters

If the Fed does cut, it will be the third time this year following rate cuts in September and July.

Economists, strategists, and Fed watchers alike will also be parsing the Fed's statement and Chairman Jerome Powell's subsequent press conference for comments on what the Fed may do going forward.

Here's what Wall Street economists expect from the Federal Reserve meeting: