In the past 40 years, the Federal Reserve has initiated a rate-cutting cycle eight times, four of which led to a recession. But analysts expect a soft landing for the U.S. economy this time.

BMI, a research institute under information service company Fitch Solutions, predicted in a report that the Fed's rate cuts this year will be 50 to 75 basis points, lower than the market's general expectation of 100 basis points. According to historical data, the Fed's rate-cutting cycle lasted an average of about 17 months in the past 40 years, with a total rate cut of 345 basis points. Excluding the two shorter rate-cutting cycles in 1987 and 1998, the average rate-cutting cycle is 28 months, and the rate cut is 444 basis points.

The report also predicts that the Fed will cut interest rates by 250 basis points in the 16 months before the end of 2025. However, given that inflationary pressures are still there and household finances are in good shape, this rate-cutting cycle is expected to be slightly shorter than the historical average, as households will respond relatively quickly to rate cuts.

It is worth noting that past rate-cutting cycles were usually accompanied by economic recessions. Of the eight rate cuts since 1984, half of the cycles were followed by recessions!