Deutsche Bank analyzes the potential impact of the FOMC meeting on future interest rates
According to Odaily, Deutsche Bank published a report analyzing the implications of this week's Federal Open Market Committee (FOMC) meeting. The report states that the Federal Reserve meeting confirms the bank's main view that the expected rate cut in January could turn into a prolonged pause until 2025. Deutsche Bank claims that the nominal neutral interest rate is approximately 3.75%, and the committee needs to maintain a restrictive position regarding this level. Accordingly, the bank reaffirms its view that the federal funds rate is likely to remain above 4% next year, and no further rate cuts are expected under the current baseline scenario.
The report also emphasizes that some participants in the Federal Reserve have begun to incorporate potential economic consequences of the policies of elected President Trump into their forecasts. This consideration could lead to higher inflation forecasts for 2025 and 2026. Regarding the labor market, Federal Reserve Chairman Jerome Powell characterized it as robust but noted that the current job creation level is below what is necessary to maintain a stable unemployment rate. This assessment highlights the challenges facing the labor market and the broader economic outlook as policymakers navigate a changing economic landscape.
