Fed Cuts Rates 25 bp on 9-3 Vote; Dot Plot Shows One 2026 Cut

Mitsubishi UFJ Financial Group (MUFG) has issued a warning regarding the Federal Reserve's monetary policy outlook for the second half of 2024, highlighting significant uncertainty driven by potential leadership transitions. This comes as the Fed recently implemented a 25 basis point rate cut and acknowledged a cooling labor market. However, the central bank's hawkish 2026 dot plot, indicating fewer rate cuts than market anticipates, suggests a cautious approach. MUFG's analysis underscores a growing divergence between the Fed's internal projections and broader market expectations, with future leadership changes poised to further complicate policy decisions and potentially heighten market volatility.