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Forbes: A 25 basis point rate cut has become a consensus in the market, and the key lies in how the Federal Reserve signals its monetary policy for next year

ChainCatcher news, according to Forbes, economists and financial market professionals indicate that the Federal Reserve is likely to announce a 25 basis point rate cut in the early hours of the 19th, but perhaps more noteworthy is what signal the Fed will send regarding its monetary policy goals for 2025.Currently, economists from the three major investment banks—Bank of America, Goldman Sachs, and JPMorgan Chase—predict that the Fed will lower the interest rate from the current range of 4.5%-4.75% by 25 basis points to 4.25%-4.5%. This would bring the rate down to its lowest level since February 2023, a full percentage point lower than the 5.25%-5.5% range from July to September 2023.However, despite the market reaching a clear consensus on this, the Fed will also release its quarterly economic forecasts. This includes each central bank president's expectations for interest rates in 2025. Economists from Bank of America, Goldman Sachs, and JPMorgan Chase expect the median forecast to be revised from the previous prediction of four rate cuts of 25 basis points next year to three, with an expected target range of 3.5%-3.75% by the end of 2025. Regardless, it is clear that Americans will need to adapt to higher interest rates for an extended period, as rates are likely to remain above 3% for a long time, a threshold that was never reached from 2009 to 2021.

Analysts: The Federal Reserve may pause the rate cut process in early 2025, ignoring inflation data could face liquidation risks

ChainCatcher news, according to Jinshi reports, U.S. Bank Chief Economist Stephen Juneau released a latest report warning that investors ignoring inflation data may face liquidation risks in 2025. The latest data shows that the November CPI rose by 2.7% year-on-year and increased by 0.3% month-on-month, up 0.1 percentage points from October; the November PPI rose by 0.4% month-on-month, significantly exceeding the market expectation of 0.2%.Federal funds futures indicate a 98% probability that the Federal Reserve will cut interest rates by 25 basis points next week, but BlackRock Global Fixed Income CIO Rick Rieder, EY Chief Economist Greg Daco, and Nationwide Economist Oren Klachkin all expect that, influenced by potential new policies from Trump, the Federal Reserve may pause the rate-cutting process in early 2025.The market needs to be wary of three major risks: higher tariff policies, deficit financing tax cut plans, and tightened immigration policies, as these factors may keep the core PCE inflation rate elevated over the next two years. Daco particularly pointed out that although the possibility of a rate cut next week is close to a "coin toss probability," the subsequent pace of rate cuts will clearly slow down, and policymakers will remain highly vigilant regarding new government policies.
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