Interest Rate Cut Expectations from U.S. Federal Reserve
(Reuters) – Most brokerages anticipate a slower pace of interest rate cuts from the U.S. Federal Reserve in 2025. A majority expect a pause in cuts during an upcoming policy meeting scheduled for Wednesday.
Recent economic indicators, including the jobs report and a rise in the consumer price index, have reduced expectations for a higher number of cuts in the first half of this year. The Fed had reduced interest rates by 100 basis points (bps) in the previous year.
Market participants are currently betting on at least two rate cuts by the end of this year, according to data compiled by LSEG.
After lowering rates by a quarter percentage point at the Dec. 17-18 meeting, Fed Chair Jerome Powell indicated that policymakers might now take a “cautious” approach regarding further reductions.
Brokerages’ Rate Cut Estimates Before Fed’s Policy Decision
| Brokerages | Jan 2025 | 2025 No. of cuts | Fed Funds Rate |
|---|---|---|---|
| BofA Global Research | No rate cut | No rate cut | 4.25-4.50% (end of December) |
| Barclays (LON:BARC) | No rate cut | 25 (in June) | 4.00-4.25% (end of 2025) |
| BNP Paribas (OTC:BNPQY) | No rate cut | No rate cut | 4.25-4.50% (end of December) |
| Goldman Sachs | No rate cut | 50 (June and December) | 3.75-4.00% (through December) |
| J.P. Morgan | No rate cut | 50(June and September) | 3.75-4.00% (through September 2025) |
| Morgan Stanley (NYSE:MS) | No rate cut | 50 (through June) | 3.75-4.00% (through June 2025) |
| Deutsche Bank (ETR:DBKGn) | No rate cut | No rate cut | 4.25-4.50% (end of 2025) |
| ING | No rate cut | 75 | 3.50-3.75% |
| UBS Global Wealth Management | No rate cut | 50 | 3.75-4.00% (end of 2025) |
| Citigroup (NYSE:C) | No rate cut | 125 (starting in May) | 3.00-3.25% (end of 2025) |
| Macquarie | No rate cut | 25 | 4.00-4.25% |
| Berenberg | No rate cut | No rate cut | 4.25-4.50% (end of 2025) |
| Wells Fargo (NYSE:WFC) | No rate cut | 50 (September and December) | 3.75-4.00% (end of 2025) |
| Nomura | No rate cut | – | – |
*Note: UBS Global Research and UBS Global Wealth Management are separate, independent divisions in the UBS Group.
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