DBS Bank: The aggressive rate cut pricing by the Federal Reserve may end in disappointment and trigger panic

ChainCatcher news, according to Jinshi reports, DBS Bank stated that the market expects the Federal Reserve to implement a series of rate cuts, but aggressive market pricing may lead to disappointment and ultimately trigger panic.

Economist Taimur Baig wrote in a report: "An inflation rate below 3% and a policy rate above 5% often struggle to coexist, so it is necessary to implement some monetary easing. However, the extent of the rate cuts reflected by the market seems excessive. For the yield curve to reflect a scenario where rate cuts exceed 200 basis points over the next 16 months, the U.S. economy must weaken significantly, and inflation must fall below 2%, which is unlikely to happen." DBS Bank's fundamental view is that by the end of 2025, the Federal Reserve will cut rates by 150 basis points, with a 25 basis point cut expected this week.