A new poll by the Reuters news agency has found that a majority of economists expect the U.S. Federal Reserve to further lower interest rates at its final meeting of the year in December.
The U.S. central bank is next scheduled to decide on interest rates Dec. 18. Economists polled by Reuters anticipate a 25-basis point reduction at that meeting.
If the consensus view is correct, the Fed will have lowered interest rates a full percentage point this year after aggressively raising rates to lower inflation that peaked at 9.1% in June 2022.
However, economists who were surveyed said they expect the Fed to slow its pace of interest rate cuts in 2025 due to the risk of higher inflation under a second Donald Trump presidency.
Trump’s proposals for higher tariffs and tax cuts could spark a rise in inflation next year, say economists.
U.S. economic strength and stock markets near record highs have also clouded the outlook for rate cuts in 2025, say many economists.
Nearly 90% of 106 economists polled by Reuters said that they expect a 25-basis point rate cut in December, taking the benchmark Fed Funds Rate down to a range of 4.25% to 4.50%.
However, 85% of economists said the risk of inflation resuming next year had risen now that Trump had been re-elected.
A majority of economists surveyed said the Fed will likely deliver another 25-basis point rate cut in the first three quarters of 2025 but then hold rates steady for the remainder of the year.
Futures traders are currently placing the odds of a 25-basis point rate cut from the U.S. Federal Reserve this December at 60%.
