According to Odaily, TD Securities has revised its forecast for the Federal Reserve's interest rate strategy following market reactions to Trump's election victory. The market anticipates a combination of tax cuts and tariffs, which is expected to elevate the Fed's neutral rate. This adjustment comes as rising inflation is projected to slow the pace of rate cuts in 2025.
TD Securities now predicts that the Federal Reserve will implement a series of 25 basis point rate cuts in November, December, and January, followed by a pause in March. The Fed is expected to continue this 'cut-pause-cut' approach throughout 2025, ultimately reducing the interest rate to 3.5% by the end of the year. This is an upward revision from the previous expectation of a 3.0% rate.
In the first half of 2026, the Federal Reserve is anticipated to lower the interest rate further to 3.0%. This indicates that while the neutral rate remains unchanged, the Fed is expected to reach this target later than initially projected.
