US Fed to cut whopping 125 basis points? Here is the latest bps interest rate cut projection

Brokerage HSBC projected the Fed to cut by a further 125 basis points (bps) by end of 2025 that includes a 25 bps cut this month. The Federal Reserve's rate-setting committee meeting is scheduled on December 17 and 18.

Meanwhile, brokerages including Morgan Stanley are reiterating their expectation of a 25-basis-point interest rate cut by the U.S. Federal Reserve in December, following the nonfarm payrolls data.

Financial markets currently assign a probability of around 70 per cent that the Fed will cut rates by a quarter percentage-point at its December meeting, and a roughly 30 percent chance it will pause, according to data from CME Group.


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That would leave the Fed's benchmark lending rate between 4.25 and 4.50 per cent -- one percentage point below its level before the Fed started cutting rates in September.

The US central bank has been on a journey since the Covid-19 pandemic, hiking interest rates to a two-decade high and holding them there in order to tame a surge in inflation, before starting to dial back rates in recent months.

The US economy is now relatively healthy, with robust economic growth, an unemployment rate still relatively close to historic lows, and inflation at 2.3 percent in October, according to the Fed's favored measure -- just above its long-term target of two per cent.

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FAQs

Q1. When is US Fed meeting on December?
A1. The Federal Reserve's rate-setting committee meeting is scheduled on December 17 and 18.

Q2. What is the current inflation rate in US?
A2. The US economy is now relatively healthy, with robust economic growth, an unemployment rate still relatively close to historic lows, and inflation at 2.3 percent in October, according to the Fed's favored measure -- just above its long-term target of two per cent.