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The centerpiece of this week's event will be a two-day FOMC meeting, the results of which will be summed up on Wednesday. Traders expect the Federal Reserve to reduce the interest rate by 25 bp, as the recently published statistics indicate a strengthening of negative trends and a slowdown in the key economic sectors.

Traditionally, the main focus will be on the statement of the FRS and the comments of Jerome Powell, which may signal further plans to change the monetary policy. Probably, after the rate reduction in November, the FRS will pause to assess the impact of the previous actions. Jerome Powell has repeatedly compared the FRS' current policy with the regulator's actions in the late 90s. At that time, the rate was reduced by 75 bp and after a short pause the process of tightening monetary policy was resumed.

Trade negotiations between the USA and China remain an important factor influencing the Federal Reserve Board's action. Both sides have recently noted significant progress in the negotiations. The South China Morning Post reported on Tuesday that the leaders of the US and China will sign an interim trade agreement at the APEC summit on November 17.

In our view, the head of the Federal Reserve Board will follow a very cautious rhetoric at the press conference. Any sharp statements may provoke a strong reaction, offsetting all efforts to reduce the cost of crediting and stabilize the market. Most likely Jerome Powell will avoid direct statements about further plans of the FRS, instead focusing on the publication of macroeconomic data. It should be noted, that a few hours before the announcement of the decision of the FRS, data on GDP growth in the U.S for the 3rd quarter will be released, and on Friday the labor market report for October will be released.

We recommend to refrain from active market participation until the end of today.


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