After the victory of Donald Trump, understand one thing, the golden dreams shown by the Central Bank of America during the 0.50 percent cut in the policy rate in the month of September are now about to be broken. An indication of this was clearly visible in the November policy meeting. When the Federal Reserve cut the policy rate by only 0.25 percent. A policy meeting is going to be held once again in the month of December. It is being estimated that the US Federal Reserve will not cut interest rates this time. This means that the good days of the common people in America are about to end. Let us also tell you what kind of estimates are being made regarding the interest rates.
Nomura estimates on interest rates
Japanese financial company Nomura has said that there is no hope of cutting interest rates in the US Federal Reserve’s December policy meeting. It has become the first global brokerage to signal a pause in Central’s rate cut cycle after Donald Trump’s election victory. Nomura now expects the Fed to make only two 25-basis point rate cuts in 2025 at its March and June meetings, keeping the brokerage’s Fed funds rate estimate frozen at 4.125 percent until next year. The Fed’s benchmark interest rate is currently in the 4.50-4.75 percent range. It has cut rates by 75 bps in 2024. Other global brokerages including Goldman Sachs and J.P. Morgan expect a 25-basis point cut from the central bank next month.
Fed is in no hurry now
Nomura expects the Fed to pause its tightening cycle next month after recent dovish comments from policymakers amid sluggish economic growth and the prospect of persistently rising inflation would signal the central bank is in no rush to lower rates. Not there. The main reason for the growing hesitation of the Fed to cut rates is the victory of Donald Trump in America, after which a lot of political changes are being seen in the country.
How much is inflation in America?
Wall Street is bracing for more inflationary pressure in the coming year as the President-elect pushes tax cuts, higher tariffs and action on immigration. Nomura said in a note on Friday that tariffs are expected to push up real inflation by the summer. Last week’s data showed U.S. consumer prices rose 2.6 percent in the 12 months through October, above the Fed’s 2 percent target but in line with economists’ expectations. According to CME Group’s FedWatch tool, traders now see a 34.7 percent chance that the central bank will hold off on cutting rates in December. Nomura expects a long pause in US rate cuts until March 2026 after a possible cut in June.
