The Fed's rate cut this week is a done deal!

Although the U.S. inflation rate (CPI) in November has stalled, this may not prevent the Federal Reserve from cutting rates next week. On Thursday, the market widely expects the Fed to announce a rate cut at next week's FOMC meeting, with the federal funds futures market currently showing that Fed officials will almost certainly choose to cut rates by another 25 basis points at the FOMC meeting on December 17-18.

It is worth mentioning that this expectation is not based on the latest inflation figures, but rather on the overall economic trend. From July 2023 to September 2024, the Fed will raise interest rates and maintain them at a level of 5.25% to 5.50%. The economic environment at that time is vastly different from now; although inflation has not yet reached the Fed's 2% target, it has significantly retreated from its peak, and employment conditions have also stabilized.

Fed officials are also inclined to further cut rates to normalize policy, avoiding restrictions on economic growth or causing deterioration in employment. Meanwhile, media analysis reminds that one should not be surprised by the forward guidance issued by the Fed after the rate cut next week; the Fed may cautiously consider the pace of subsequent rate cuts, possibly hinting at a pause in rate cuts at the beginning of the year and reducing the number of cuts in 2025.