(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 No. of cuts Fed Funds Rate
2025 in 2025
BofA Global No rate cut No rate cut 0 4.25-4.50%(end of
Research 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 2 3.75-4.00% (through
December) December)
J.P.Morgan No rate cut 50(June and – 3.75-4.00% (through
September) September 2025)
Morgan Stanley 25 50 (through 2 3.75-4.00% (through
bps cut June 2025) 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 No rate cut 50 – 3.75-4.00% (end of
Wealth 2025)
Management
Citigroup No rate cut 125 (starting 5 3.00-3.25% (end of
in May) 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 2 3.75-4.00% (end of
and December) 2025)
Nomura No rate cut No rate cut 0 –
HSBC No rate cut 75 (starting 3 3.50%-3.75% (end of
in June) 2025)
Here are the forecasts from major brokerages before PCE data:
Rate cut estimates (in bps)
Brokerages Mar 2025 2025 No. of cuts Fed Funds Rate
in 2025
BofA Global No rate cut No rate cut 0 4.25-4.50%(end of
Research 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 2 3.75-4.00% (through
December) December)
J.P.Morgan No rate cut 50(June and – 3.75-4.00% (through
September) September 2025)
Morgan Stanley 25 bps cut 50 (through 2 3.75-4.00% (through
June 2025) 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 No rate cut 50 – 3.75-4.00% (end of
Wealth 2025)
Management
Citigroup No rate cut 125 (starting 5 3.00-3.25% (end of
in May) 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 2 3.75-4.00% (end of
and December) 2025)
Nomura No rate cut – 1 –
HSBC No rate cut 75 (starting 3 3.50%-3.75% (end of
in June) 2025)
* UBS Global Research and UBS Global Wealth Management are distinct, independent divisions in UBS Group
(Compiled by the Broker Research team in Bengaluru; Edited by Alden Bentley, Shinjini Ganguli, Maju Samuel, Devika Syamnath, Diane Craft, Anil D’Silva and Shounak Dasgupta)
