The US Federal Reserve will hold its final meeting of 2024 today. The US Federal Reserve is expected to make several important announcements after the meeting. There is a high probability that it will announce a 25 basis point interest rate cut.

Fed Expected to Cut Interest Rates Again

According to Kalshi, there is at least a 96% chance that the Federal Reserve will announce a 25 basis point interest rate cut today.

The US Federal Reserve has already cut interest rates at least twice this year. Once the new rate cut is implemented, the total rate cut in 2024 will be 100 basis points.

US Inflation Index Rises Again

Inflationary pressures have risen sharply in recent months, adding complexity to the Federal Reserve's efforts to stabilize the economy.

At the beginning of the year, the US CPI was as low as 308.417. In April, it rose to 313.55. In October, it hit a yearly high of 315.66. However, in November, it fell slightly to 315.49.

In January 2024, the US producer price index was 142,683. In June, it was 144,834. Since June, the index has been steadily increasing. In November, the index reached a yearly high of 146,493.

At the beginning of the year, the US personal consumption expenditures price index was around 122.115. In April, it peaked at 123.234. Since June, it has been steadily rising. In September, it was at 123.931. In October, it rose to a monthly peak of 124.266.

Challenges of the US Labor Market

The worsening US job market has largely prompted policymakers to consider the option of cutting interest rates. While the job market initially saw some improvement, it has recently begun to weaken.

The US initial jobless claims index was 224,000 on November 30. In the first week of December, the index recovered to 242,000 – a level it had reached at least eight weeks earlier.

On November 23, the US Continuing Jobless Claims Index was 1.87K. On November 30, the index jumped to 1.89K.

What to Expect in 2025

It is important to understand the US Federal Reserve's outlook for 2025. The US will see a new administration take office in the White House at the end of January next year. Data shows that the main challenge for the incoming administration will be to balance controlling inflation with economic growth.

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