Analyst: The Fed may hint at pausing rate cuts in early 2025

On December 14th, Jin10 News reported that analyst Megan Leonhardt said that although there was no progress in controlling inflation in November, federal funds futures indicate that there is almost a 100% chance that Federal Reserve policymakers will cut the benchmark interest rate by 25 basis points. The rationale for the rate cut may depend on the Fed officials’ desire to align the benchmark interest rate with the current economic conditions, as inflation has fallen sharply from its peak in 2022, and the previously tight labor market is normalizing. However, if next week’s rate cut is accompanied by Powell’s forward guidance, suggesting that the Fed will seek to pause rate cuts in early next year, don’t be surprised. The Fed not only wants to control inflation in the final stage, but the results of many fiscal policies in the coming year may change the direction of inflation. In addition, there are indeed some weaknesses in the labor market that are worth careful observation. All of these present directional challenges for the Fed in the coming months, and policymakers may avoid taking action at an astonishing speed.