Credit Agricole: December FOMC preview – we expect a hawkish cut ...Middle East

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Credit Agricole: December FOMC preview – we expect a hawkish cut

Key Points:

Expected Action:

    25bp rate cut, marking the third consecutive reduction in 2024, totaling 100bp for the year.Market expectations and consensus align with this move.

    Forward Guidance:

    Open-ended guidance likely, emphasizing a data-dependent approach.Chair Powell could hint at a possible pause in early 2025.

    Economic Backdrop:

    November employment and inflation data suggest the Fed can proceed with a cut.Persistent inflation risks point to a slower easing cycle ahead.

    Dot Plot Outlook:

    Potential upward revision in the 2025 median dot to 3.625% and 2026 to 3.125%.Implies 75bp of cuts in 2025 and 50bp in 2026, moderating from earlier projections.

    Conclusion:

    Credit Agricole expects the December FOMC to deliver a well-anticipated 25bp cut, accompanied by hawkish messaging. Forward guidance could highlight a cautious stance, suggesting a slower and more measured easing path in 2025.

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    This article was written by Adam Button at www.forexlive.com.

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