FACTBOX-Brokerages stick to slower pace of Fed rate cut forecasts after inflation report
Updates throughout
Feb 3 (Reuters) - Most brokerages continue to expect a slower pace of interest rate cuts from the U.S. Federal Reserve in 2025 after personal consumption expenditures (PCE) data came in-line with market expectations.
Meanwhile, U.S. President-elect Trump imposed tariffs on Mexico, Canada and China that could potentially become a crucial factor in the Fed's future policy decisions.
Data on Friday showed, the personal consumption expenditures(PCE) price index, Fed's preferred price gauge, rose 0.3% last month after an unrevised 0.1% gain in November. Economists polled by Reuters had forecast the PCE price index climbing 0.3%.
The inflation report comes after the Fed last week left its benchmark overnight interest rate in the 4.25%-4.50% range.
Having reduced rates by 100 basis points since September when it started its policy easing cycle, Fed Chair Jerome Powell said there would be no rush to cut them again until inflation and jobs data made it appropriate.
Here are the forecasts from major brokerages after PCE data:
Rate cut estimates (in bps) | |||||
Brokerages | Mar 2025 | 2025 | No. of cuts in 2025 | Fed Funds Rate | |
BofA Global Research | No rate cut | No rate cut | 0 | 4.25-4.50%(end of December) | |
Barclays | No rate cut | 25 (in June) | 1 | 4.00-4.25% (end of 2025) | |
BNP Paribas | No rate cut | No rate cut | 0 | 4.25-4.50%(end of December) | |
Goldman Sachs | No rate cut | 50 (June and December) | 2 | 3.75-4.00% (through December) | |
J.P.Morgan | No rate cut | 50(June and September) | - | 3.75-4.00% (through September 2025) | |
Morgan Stanley | 25 bps cut | 50 (through June 2025) | 2 | 3.75-4.00% (through June 2025) | |
Deutsche Bank | No rate cut | No rate cut | 0 | 4.25-4.50% (end of 2025) | |
ING | No rate cut | 50 (H2 2025) | 2 | 3.75-4.00% (end of 2025) | |
UBS Global Wealth Management | No rate cut | 50 | - | 3.75-4.00% (end of 2025) | |
Citigroup | No rate cut | 125 (starting in May) | 5 | 3.00-3.25% (end of 2025) | |
Macquarie | No rate cut | 25 | 1 | 4.00-4.25% | |
Berenberg | No rate cut | No rate cut | 0 | 4.25-4.50% (end of 2025) | |
Wells Fargo | No rate cut | 50 (September and December) | 2 | 3.75-4.00% (end of 2025) | |
Nomura | No rate cut | No rate cut | 0 | - | |
HSBC | No rate cut | 75 (starting in June) | 3 | 3.50%-3.75% (end of 2025) | |
Here are the forecasts from major brokerages before PCE data:
Rate cut estimates (in bps) | |||||
Brokerages | Mar 2025 | 2025 | No. of cuts in 2025 | Fed Funds Rate | |
BofA Global Research | No rate cut | No rate cut | 0 | 4.25-4.50%(end of December) | |
Barclays | No rate cut | 25 (in June) | 1 | 4.00-4.25% (end of 2025) | |
BNP Paribas | No rate cut | No rate cut | 0 | 4.25-4.50%(end of December) | |
Goldman Sachs | No rate cut | 50 (June and December) | 2 | 3.75-4.00% (through December) | |
J.P.Morgan | No rate cut | 50(June and September) | - | 3.75-4.00% (through September 2025) | |
Morgan Stanley | 25 bps cut | 50 (through June 2025) | 2 | 3.75-4.00% (through June 2025) | |
Deutsche Bank | No rate cut | No rate cut | 0 | 4.25-4.50% (end of 2025) | |
ING | No rate cut | 50 (H2 2025) | 2 | 3.75%-4.00% (end of 2025) | |
UBS Global Wealth Management | No rate cut | 50 | - | 3.75-4.00% (end of 2025) | |
Citigroup | No rate cut | 125 (starting in May) | 5 | 3.00-3.25% (end of 2025) | |
Macquarie | No rate cut | 25 | 0 | 4.00-4.25% | |
Berenberg | No rate cut | No rate cut | 0 | 4.25-4.50% (end of 2025) | |
Wells Fargo | No rate cut | 50 (September and December) | 2 | 3.75-4.00% (end of 2025) | |
Nomura | No rate cut | - | 1 | - | |
HSBC | No rate cut | 75 (starting in June) | 3 | 3.50%-3.75% (end of 2025) | |
* UBS Global Research and UBS Global Wealth Management are distinct, independent divisions in UBS Group
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