The Fed is aiming for three rate cuts, in the view of economists at Rabobank.
The Fed will halt its cutting cycle during the course of 2025
The March meeting further solidified our anticipation of three rate cuts by the FOMC within this year. By emphasizing the potential rationale for such cuts, particularly citing a weakening labor market, it’s evident that the Fed is inclined towards this course either due to growing confidence in inflation reaching the 2% target sustainably, or in response to a rise in unemployment.
However, there remains a slender possibility for the FOMC to maintain its current stance for a prolonged period. There’s still a risk that the Committee might initiate its rate-cutting phase later than June. Nonetheless, we maintain our projection for the first rate cut to occur in June. Once initiated, we foresee the Fed continuing with a pattern of quarterly 25 basis points cuts until a resurgence in inflation, possibly triggered by a widespread import tariff under a new Trump administration, prompts the Fed to halt its cutting cycle sometime in 2025.
