Analyst: The Fed may hint that it will stop cutting interest rates in early 2025
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Odaily Odaily analyst Megan Leonhardt said that despite the failure to make progress in curbing inflation in November, federal funds futures show that there is almost a 100% chance that Fed policymakers will cut the benchmark interest rate by another 25 basis points. The rationale for the rate cut may depend on the desire of Fed officials to align the benchmark interest rate with current economic conditions, as inflation has fallen sharply from its 2022 peak and the previously tight labor market is normalizing. But don't be surprised if next week's rate cut is accompanied by Powell's forward guidance, suggesting that the Fed will seek to pause rate cuts at the beginning of the year. Not only does the Fed have to keep inflation in the final stages, but many fiscal policy outcomes in the coming year may change the direction of inflation. In addition, there are indeed some weak spots in the labor market that deserve careful observation. All of this poses directional challenges to the Fed in the coming months, and policymakers may avoid acting at an alarming speed. (Jinshi)
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