The Federal Reserve is expected to cut interest rates next month. With Trump's policies coming into play, the market's expectation for the Federal Reserve to cut interest rates by the end of 2025 has been halved.

The economy is improving, inflation isn't coming down, and the stock market is reaching new heights every day. All these factors make the Federal Reserve hesitant to make any drastic moves to cut interest rates. Federal Reserve Chairman Powell stated last week: "The economy hasn't given us any urgent signals for a rate cut."

Nearly 90% of economists believe the Federal Reserve will need to cut rates by 25 basis points in December, but the market pricing shows that the likelihood of a rate cut in December is less than 60%. There is still a belief that the Federal Reserve will cut rates in December; the data looks okay, but the market feels that the U.S. economy is too strong and inflation is still high. The Federal Reserve is unlikely to cut rates as significantly as we previously thought because they need to keep an eye on inflation.