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The US witnessed a fierce struggle for the 47th presidency. After Donald Trump declared victory immediately after the elections, attention turned to economic data. The most important of these data is the FED's interest rate decision, which is expected to be announced tomorrow.
The statements made by the candidates during the election process are considered leading indicators of the future economic agenda. Among these promises, the most current topic of discussion is the stance to be taken against the FED.
TRUMP WILL TAKE A HAWKISH STANCE AGAINST THE FED
Donald Trump believes that the US president should have a say in the Fed's monetary policy decisions. Trump, who nominated Jerome Powell for the presidency of the bank in November 2017, criticizes Powell for his monetary policy decisions.
HE ADVOCATES FOR LOWERING INTEREST RATES
Trump argues that there are ways to reduce inflation without raising interest rates and generally advocates for lowering interest rates. It is expected that Trump, who will return to the presidential seat, will allow Powell to complete his presidency, which will last until 2026.
MARKETS FOCUS ON RATE CUT EXPECTATIONS
According to experts, the continuation of the Federal Reserve's (Fed) interest rate cut cycle may depend on the results of the US presidential elections, and Trump's victory may lead the Fed to act less hesitantly in its rate cut decision on November 7.
In other words, it now seems certain that the Fed will make a 25 basis point cut on November 7 after the initial 50 basis point cut. The reason for this is that the US economy has performed well despite tight monetary policy and stubborn inflation, along with the fact that high-interest rate opponent Trump is about to take the presidential seat. In fact, based on Trump's promises, a 25 basis point decrease in Fed rates in December and January 2025 has become certain.
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