DBS Bank: Pricing in the Fed’s aggressive rate cuts could lead to disappointment and panic
According to the ChainCatcher news report, DBS Bank stated that the market expects the Federal Reserve to implement a series of interest rate cuts, but the aggressive market pricing may end in disappointment and ultimately trigger panic. Economist Taimur Baig wrote in a report that "an inflation rate below 3% and a policy interest rate above 5% are often difficult to coexist, so some monetary easing is necessary. However, the market's reflection of the extent of interest rate cuts seems excessive. For the yield curve to reflect a situation where the cumulative interest rate cuts over the next 16 months exceed 200 basis points, the US economy must clearly weaken, and inflation must fall below 2%, which is unlikely to happen." DBS Bank's basic view is that by the end of 2025, the Federal Reserve will cut interest rates by 150 basis points, and this week it will cut interest rates by 25 basis points.
