The US Federal Reserve recently opted to trim its benchmark interest rates by 25 basis points during its meeting, which wrapped up on December 18, 2024. This decision was largely expected, considering that as of December 14, 2024, fed funds futures trading data reflected a 96% probability of such a cut. The adjustment brings the target range down from 450-475 basis points to 425-450 basis points.
Notably, the Fed’s outlook for 2025 suggests a more conservative approach than initially anticipated, signaling fewer rate cuts than earlier predicted. This change underscores the Fed’s ongoing concerns about inflationary pressures. Policymakers have also adjusted their inflation projections upwards for the coming year.
Intriguingly, the latest projections forecast only two 25 basis point cuts in 2025, a reduction from the four cuts that were initially projected by Fed officials back in September 2024.
In reaction to the Fed’s announcement, US equity markets experienced a noticeable correction, with…
