Insightful Word
  • Investing
  • Stock
  • Economy
  • Politics
  • Investing
  • Stock
  • Economy
  • Politics
No Result
View All Result
Insightful Word
No Result
View All Result
Home Economy

Federal Reserve to cut rates by 25 bps on Dec. 18, pause in January- Reuters poll

admin by admin
December 10, 2024
in Economy
0
Federal Reserve to cut rates by 25 bps on Dec. 18, pause in January- Reuters poll
0
SHARES
5
VIEWS
Share on FacebookShare on Twitter

By Indradip Ghosh

BENGALURU (Reuters) – The U.S. Federal Reserve will cut interest rates by 25 basis points on Dec. 18, according to 90% of economists polled by Reuters, with most expecting a pause in late January amid concerns about rising inflation risks.

President-elect Donald Trump’s proposed policies, from import tariffs to tax cuts, are expected to be inflationary. Trump is expected to move quickly on his agenda soon after he is inaugurated on Jan. 20.

News on Friday that the U.S. job market continued to cool but remained relatively resilient solidified expectations the Fed can afford to cut interest rates again before taking stock on government policy early next year. 

“With the jobs report showing more slack despite solid income and job gains, we reiterate our call for another 25bp Fed cut in December,” said Jonathan Millar, senior U.S. economist at Barclays (LON:BARC).

An overwhelming majority of economists, 93 of 103, in the poll taken after the jobs data expected a 25 bps reduction at the Dec. 17-18 policy meeting, taking the federal funds rate to 4.25%-4.50%. Ten saw no change.

Interest rate futures are in line, with a quarter point cut almost completely priced in. 

But a clear majority of economists, 58 of 99, predicted the Fed, which has already reduced the fed funds rate by a cumulative 75 bps since September, would hold rates at its Jan. 28-29 meeting. That would be just over a week after Trump returns to the White House.

Beyond that, there is no clear consensus among economists for what the Fed will do. 

“They (the Fed) are going to wait to see what happens next year, what is actually implemented versus what is kind of presented as a risk,” said Stephen Juneau, a U.S. economist at Bank of America.

The Fed is currently on a mission to get the funds rate down to neutral, which neither restricts nor stimulates the economy. Its most recent assessment of that rate is around 2.9%.

Fed Chair Jerome Powell said recently policymakers “can afford to be a little more cautious as we try to find neutral” as the economy is stronger and inflation exceeded the central bank’s September forecasts.

Nearly 60% of economists, 56 of 97, predicted at least three more 25 bps rate cuts by the end of next year to 3.50%-3.75% or lower. That majority is down from over 90% in October and more than 70% in November.

“ Next (LON:NXT) year, the emerging disagreements about the degree of restrictiveness of monetary policy, or correspondingly about the estimates of the neutral policy rate, will likely become more contentious,” said Barclays’ Millar. 

“Meanwhile, increased tariffs on imports are likely to keep core inflation elevated in 2025. In that context, we think it will be difficult for the (Fed) to cut rates more than twice next year.”

The U.S. economy, which grew an annualized 2.8% last quarter, will expand 2.1% next year and 2% in 2026, poll medians showed, faster than what Fed officials currently see as the non-inflationary growth rate of 1.8% over the coming years.        

The 2025 inflation outlook was broadly upgraded from last month. A 75% majority of economists, 36 of 48, said the risk of a resurgence in inflation in the economy next year was high. The rest said it was low.

“In the medium term, higher tariffs and potential supply chain disruptions due to aggressive trade policy under the incoming Trump administration will likely drive core inflation significantly above 3% in mid-2025,” noted David Seif, chief economist for developed markets at Nomura.

The Fed will publish its latest set of quarterly forecasts at the December meeting.

(Other stories from the Reuters global economic poll)

This post appeared first on investing.com

Previous Post

US third-quarter unit labor costs revised sharply lower

Next Post

Google shares rise on new quantum chip breakthrough

admin

admin

Next Post
Google shares rise on new quantum chip breakthrough

Google shares rise on new quantum chip breakthrough

Trending News

Swiss financial watchdog to regularly review how it oversees UBS

Swiss financial watchdog to regularly review how it oversees UBS

November 13, 2024
JEPI ETF forecast: here’s why the stock could reverse soon

JEPI ETF forecast: here’s why the stock could reverse soon

December 2, 2024
Big Tobacco offers $24 billion settlement to resolve Canadian lawsuits

Big Tobacco offers $24 billion settlement to resolve Canadian lawsuits

October 18, 2024
Subscribe to Insightful Word


    Recent News

    BBVA reassesses Sabadell Bid after Spanish government imposes integration freeze

    BBVA reassesses Sabadell Bid after Spanish government imposes integration freeze

    June 25, 2025
    Long US30: price Sustains above 43K, targets 44K on risk rally and fed clarity

    Long US30: price Sustains above 43K, targets 44K on risk rally and fed clarity

    June 25, 2025
    NATO leaders agrees on increasing defence spending to 5%

    NATO leaders agrees on increasing defence spending to 5%

    June 25, 2025
    BMBL stock rockets 26% after job cuts and raised Q2 revenue forecast

    BMBL stock rockets 26% after job cuts and raised Q2 revenue forecast

    June 25, 2025

    Recent News

    BBVA reassesses Sabadell Bid after Spanish government imposes integration freeze

    BBVA reassesses Sabadell Bid after Spanish government imposes integration freeze

    June 25, 2025
    Long US30: price Sustains above 43K, targets 44K on risk rally and fed clarity

    Long US30: price Sustains above 43K, targets 44K on risk rally and fed clarity

    June 25, 2025

    Latest News

    • BBVA reassesses Sabadell Bid after Spanish government imposes integration freeze
    • Long US30: price Sustains above 43K, targets 44K on risk rally and fed clarity
    • NATO leaders agrees on increasing defence spending to 5%

    About Insightful Word

    • Contacts
    • Cookie Notice
    • Privacy Policy
    • Terms of Service
    • Trading tools
    • Contacts
    • Cookie Notice
    • Privacy Policy
    • Terms of Service
    • Trading tools

    Copyright © 2025 Insightfulword.com. All Rights Reserved.

    No Result
    View All Result
    • Investing
    • Stock
    • Economy
    • Politics

    Copyright © 2025 Insightfulword.com. All Rights Reserved.