FACTBOX-Major brokerages continue to expect slower pace of Fed rate cuts after CPI data
March 13 (Reuters) - Barclays revised its stance, now expecting the Federal Reserve to deliver two quarter-point rate cuts this year, while other major Wall Street brokerages reiterated their predictions for a slower pace of cuts in 2025 after data showed U.S. consumer prices increased less than expected in February.
Data showed on Wednesday that the consumer price index rose 0.2% last month after accelerating 0.5% in January, while economists polled by Reuters were expecting the CPI to gain 0.3%.
President Trump's tariff policy is expected to drive up inflation and increase pressure on the U.S. central bank as it looks to control persistently high prices.
Currently, traders expect nearly three rate cuts of 25 basis points each for the year, according to data compiled by LSEG.
The Fed left its benchmark overnight interest rate in the 4.25-4.50% range in its January policy meeting, with Chair Jerome Powell saying there would be no rush to cut them again until inflation and jobs data made it appropriate. The Federal Open Market Committee (FOMC) is scheduled to meet again on March 18 and 19.
Here are the forecasts from brokerages after CPI data:
Brokerages | March 25 | Total cuts in 2025 | No.of cuts in 2025 | Fed Funds Rate |
Barclays | No rate cut | 50 bps | 2 (in June and September) | 3.75-4.00% (through December) |
Citigroup | No rate cut | 125 bps | 5 (starting in May) | 3.00-3.25% (end of 2025) |
Goldman Sachs | No rate cut | 50 bps | 2 (June and December) | 3.75-4.00% (through December) |
Deutsche Bank | No rate cut | No rate cut | 0 | 4.25-4.50% (end of 2025) |
J.P.Morgan | No rate cut | 50 bps | 2 (June and September) | 3.75-4.00% (through September 2025) |
Macquarie | No rate cut | No rate cut | 0 | 4.25-4.50% (end of 2025) |
Morgan Stanley | No rate cut | 25 bps | 1 (in June) | 4.00-4.25% (in 2025) |
Here are the forecasts from brokerages before CPI data on Wednesday:
| Rate cut estimates (in bps) | ||||
Brokerages | Mar 2025 | Total cuts in 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 bps | 1 (in June) | 4.00-4.25% (end of 2025) | |
Goldman Sachs | No rate cut | 50 bps | 2 (June and December) | 3.75-4.00% (through December) | |
J.P.Morgan | No rate cut | 50 bps | 2 (June and September) | 3.75-4.00% (through September 2025) | |
Morgan Stanley | No rate cut | 25 bps | 1 (in June) | 4.00-4.25% (in 2025) | |
Deutsche Bank | No rate cut | No rate cut | 0 | 4.25-4.50% (end of 2025) | |
ING | No rate cut | 50 bps | 2 (H2 2025) | 3.75-4.00% (end of 2025) | |
Citigroup | No rate cut | 125 bps | 5 (starting in May) | 3.00-3.25% (end of 2025) | |
Macquarie | No rate cut | No rate cut | 0 | 4.25-4.50% (end of 2025) | |
Berenberg | No rate cut | No rate cut | 0 | 4.25-4.50% (end of 2025) | |
Wells Fargo | No rate cut | 50 bps | 2 (September and December) | 3.75-4.00% (end of 2025) | |
Nomura | No rate cut | No rate cut | 0 | - | |
HSBC | No rate cut | 75 bps | 3 (starting in June) | 3.50-3.75% (end of 2025) | |
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