We had some news this month from OPEC and the U.S. Federal Reserve, but first let’s look at an overview of the U.S. economy.

Economic growth in the U.S. is expected to rebound from the tepid pace of the first half of this year. When the third quarter growth report is released later this month, gross domestic product is expected to be in the range of 2.5 percent to 3 percent, helped out by healthy consumer spending and a rebound in inventories.

This pace of growth is a little stronger than the recession-to-date pace of around 2 percent.

The U.S. Federal Reserve met in September and voted to keep the overnight federal funds rate steady at around three-eighths of a percent. But there was some unusual discord in the vote, which is rare. A minority of three members wanted to raise the rate.

The Fed meets two more times this year. The next meeting is just six days before the U.S. general election, so we do not expect any change in monetary policy to be decided at that time. The follow meeting will be in late December. We expect a rate increase then, assuming economic reports continue to show stable growth. If so, it will be the Fed’s only rate increase this year.

OPEC held a meeting in late September and decided to limit future oil production. Other non-OPEC members, including Russia, may join the decision.

OPEC is moving back to its historic role of trying to control the oil market’s supply and pricing. The details of the production cuts will be released in November. There is some skepticism about this move, as we have seen reports like this in the past with no action resulting since these negotiations are very delicate and tend to fall apart.

 

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