Economists polled by the Reuters news agency expect the U.S. Federal Reserve to cut interest rates by 25-basis points on Dec. 18.
The poll found that 90% of economists anticipate a quarter of a percentage point rate cut before year’s end from the American central bank.
However, the same survey found that most economists expect the U.S. Federal Reserve to then pause any further rate cuts in early 2025 amid concerns about rising inflation.
President-elect Donald Trump's proposed policies, from import tariffs to tax cuts, are expected to be inflationary to the economy, leading to a pause in interest rate cuts.
Recent news that the U.S. job market continues to cool solidified expectations that the Fed will again cut interest rates before taking a break to assess the Trump administration’s policies.
In all, 93 out of 103 economists expect a 25-basis point interest rate reduction at the conclusion of the Fed’s Dec. 18 policy meeting.
That would lower the Federal Funds Rate to a range of 4.25% to 4.50% and would be the central bank’s third rate cut of the year.
Futures traders on Wall Street also expect a 25-basis point rate cut on Dec. 18. Futures markets see the Fed cutting interest rates only twice in the New Year, by 25-basis points each time.
Most economists, 58 of 99, expect the Fed, which has already reduced interest rates a cumulative 75-basis points since September of this year, will hold rates steady in January.
Beyond that, there is no clear consensus among economists for what the U.S. Federal Reserve will do in 2025.
The 2025 inflation outlook has been upgraded among economists, with 75% of those polled
saying the risk of a resurgence in inflation next year under Trump is high.
