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