Most brokerages retain expectations of 25-bps rate cut from US Fed in December
Updates with Deutsche Bank forecast
Nov 22 (Reuters) -Major brokerages reiterated their view of a 25-basis-point (bp) interest-rate cut by the U.S. Federal Reserve in December after U.S. consumer prices for October increased as expected, even as Fed Chair Jerome Powell indicated there is no need to rush rate cuts given strong U.S. economy.
The consumer price index (CPI) rose by 2.6% in October, data showed on Nov. 13, while the core rate, which strips out food and energy, rose 3.3% - in line with market expectations.
Citigroup stuck to its view of a cut of 50 bps in December, while all major brokerages continue to see a 25-bps cut post the inflation report.
Following the CPI data, Powell affirmed in prepared remarks delivered at a Dallas Fed event on Nov. 14 that ongoing economic growth, a solid job market, and inflation above its 2% target means the central bank does not need to rush to lower interest rates.
"We now see a greater risk that the FOMC(Federal Open Market Committee) could slow the pace sooner, possibly as soon as the December or January meetings," Goldman analysts said in a note dated Nov. 14 following Powell's remarks.
Here are the forecasts from major brokerages after the CPI data:
Rate cut estimates (in bps) | ||||
Brokerages | Dec'2024 | 2025 | Fed Funds Rate | |
BofA Global Research | 25 | 50 | 3.75%-4.00% (end of June) | |
Barclays | 25 | 50 | 3.75%-4.00% (end of 2025) | |
Macquarie | 25 | 100 (through June 2025) | 3.25%-3.50% (through June 2025) | |
Goldman Sachs | 25 | 100 (through September 2025) | 3.25%-3.50% (through September 2025) | |
J.P.Morgan | 25 | 75(through September 2025) | 3.75% (through September 2025) | |
*UBS Global Research | 25 | 125 | 3.00%-3.25% (through end of 2025) | |
TD Securities | 25 | 100 | 3.25%-3.50% (through end of 2025) | |
Morgan Stanley | 25 | 100 (through June 2025) | 3.375% (Q4 2025) | |
Jefferies | 25 | 100 | 3.25%-3.50% (through end of 2025) | |
Nomura | 25 | 25 | 4.00-4.25% (through end of 2025) | |
*UBS Global Wealth Management | 25 | 100 | 3.25%-3.50% (through end of 2025) | |
Deutsche Bank | 25 | No Rate Cuts | 4.375% | |
Citigroup | 50 | - | - | |
*UBS Global Research and UBS Global Wealth Management are distinct, independent divisions in UBS Group
Here are the forecasts from major brokerages before the CPI data:
Rate-cut estimates (in bps) | ||
Brokerages | 2024 | |
Nov | Dec | |
BofA Global Research | 25 | 25 |
Deutsche Bank | 25 | 25 |
Barclays | 25 | 25 |
Macquarie | 25 | 25 |
Goldman Sachs | 25 | 25 |
J.P.Morgan | 25 | 25 |
*UBS Global Wealth Management | 50 | |
Citigroup | 25 | 50 |
Compiled by the Broker Research team in Bengaluru; Editing by Krishna Chandra Eluri and Tasim Zahid
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