The Fed cut interest rates by a quarter point on Wednesday, bringing the target range to 4.25% to 4.5%. The central bank revised its outlook for rate cuts in 2025, however, indicating that there will be two reductions. That’s down from the four forecasts in September.
Fed Chair Jerome Powell said that with Wednesday’s move, we have lowered our policy rate by a full percentage point from its peak, and our policy stance is now significantly less restrictive. We can therefore be more cautious as we consider further adjustments to our policy rate.
Goldman, Bank of America, and Wells Fargo think the Fed will cut rates three times in 2025, skipping January's cut. Morgan Stanley anticipates that the Fed will implement two interest rate cuts, each by 25 basis points in 2025.
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