This week's interest rate cut by the Federal Reserve is already a foregone conclusion!

Although the CPI inflation in the United States has stalled in November, this may not prevent the Federal Reserve from implementing an interest rate cut next week. On Thursday, the market broadly expects the Federal Reserve to announce a rate cut at next week's FOMC meeting, with the federal funds futures market currently indicating that Federal Reserve officials will almost certainly choose to cut rates by 25 basis points again at the FOMC meeting on December 17-18.

It is worth mentioning that this expectation does not stem from the latest inflation data, but rather from the overall economic development trends. From July 2023 to September 2024, the Federal Reserve raised interest rates and maintained them at a level of 5.25% to 5.50%. The economic environment at that time was quite different from the current one; although inflation has not yet reached the Federal Reserve's 2% target, it has significantly decreased from its peak, and employment conditions are gradually stabilizing.

Federal Reserve officials tend to favor further rate cuts to normalize policy, avoiding constraints on economic growth or worsening employment conditions. At the same time, media analysis warns not to be surprised by the forward guidance issued by the Federal Reserve after next week's rate cut; the Federal Reserve may cautiously consider the pace of subsequent rate cuts, and they might hint at pausing rate cuts at the beginning of the year and reducing the number of rate cuts in 2025.