The Federal Reserve recently cut interest rates by 25 basis points, as widely anticipated by the markets. Following this decision, there is increasing speculation that the Fed might pause rate cuts in December. According to the CME's FedWatch Tool, futures traders estimate a nearly 65% chance of another 25 basis point cut in December, compared to over a 35% probability that the rates will remain unchanged.
Before the Fed's recent rate cut announcement, the expectation for a December pause was about 33%. This suggests a growing belief among investors in a potential halt to rate cuts. The probability of maintaining the federal funds rate range between 4.5% and 4.75% until January is now only around 22%, indicating a likelihood of over 78% for a pause in rate reductions.
Goldman Sachs has adjusted its forecast following the Fed's recent actions. The financial institution now anticipates rate cuts of 25 basis points in December, January, and March. Further reductions are expected in June and September, diverging from their earlier prediction of cuts in May and June.
While these predictions reflect current market conditions, investors are advised to act cautiously and consider whether these opinions match their financial objectives.
