Federal Reserve: After a rate cut in December, it may slow down or even stop cutting rates
A recent article by Nick Timiraos, a well-known journalist for the Wall Street Journal, often referred to as the voice of the Federal Reserve, indicates that the Fed's rate cut plans are constantly changing, with investors widely expecting a third consecutive rate cut this week. After this, they are preparing to slow down or even stop cutting rates. Nick Timiraos noted that Powell is trying to find the right balance amid signs of a less volatile labor market and inflation that appears slightly more stable than in September. Some officials have expressed doubts about continuing rate cuts, and those who strongly supported the previous two cuts are no longer so certain. One option this week is to cut rates by 25 basis points and then use the new economic forecasts to strongly suggest that the central bank is prepared to cut rates more slowly. At the same time, Morgan Stanley predicts that expectations for pausing rate cuts will heat up next year, as long-term U.S. Treasuries have fallen for five consecutive weeks, experiencing the worst week of the year. Market expectations for future Fed policies have become more cautious, especially regarding the pace of rate cuts in 2025. Morgan Stanley's forward-looking report pointed out that the dot plot to be released by the Fed next week will show that the median rate expectation for 2025 remains around 3.375%, lower than the market's expected bottom range of 3.4% to 3.7%. Investors should pay attention to the downward trend in housing inflation, as the Fed may cut rates consecutively in December this year and January next year. As the Fed meeting approaches, Morgan Stanley stated that the three key issues investors are focusing on are: expectations for the 2025 Fed rate dot plot, Chairman Powell's statements on the pace of rate cuts, and decisions on the overnight reverse repurchase rate.