At the September monetary policy meeting, Federal Reserve officials indicated the possibility of further interest rate cuts in the coming months. If they adhere to their initial forecasts, we may witness a quarter-point cut at the next meeting and potentially four more cuts in 2025.
However, these projections are not set in stone and are subject to change based on the evolving economic conditions. Should concerns about rising inflation intensify, officials might decide to pause on further rate reductions.
Market expectations, as reflected in Fed funds futures, suggest a more conservative estimate of around two rate cuts in the upcoming year. This cautious outlook could be influenced by the anticipation of potential inflationary pressures stemming from proposed policies by President-elect Donald Trump, including significant tariffs.
Fed Chair Jerome Powell emphasized the importance of data analysis in shaping future decisions during a post-meeting press conference. Powell highlighted that each meeting would involve a thorough review of incoming economic indicators to assess their impact on the overall economic outlook. However, he refrained from commenting on any potential revisions to the officials' forecasts since the September meeting.
