TLDR
- Standard Chartered expects a 25-basis-point rate cut by the Fed this Wednesday, aligning with other major banks.
- The bank forecasts the Fed will keep rates steady through 2026 after this week’s cut.
- Standard Chartered highlights uncertainty in recent economic data, but sees the rate cut as necessary for U.S. growth.
- JPMorgan, Morgan Stanley, and Nomura also revised their forecasts due to weak November data and Fed officials’ comments.
- Market participants are focused on future Fed policy decisions and the potential impact on assets like Bitcoin.
Standard Chartered has revised its forecast for the upcoming Federal Reserve meeting, now predicting a 25-basis-point rate cut. The bank joins JPMorgan, Morgan Stanley, and Nomura in expecting the Federal Reserve to reduce rates this Wednesday. After this expected cut, Standard Chartered expects the Fed to hold rates steady through 2026.
Standard Chartered Changes Its Forecast
According to a report by Reuters, Standard Chartered adjusted its outlook for the Federal Reserve’s monetary policy. The bank now anticipates a 25-basis-point cut in interest rates during the December Federal Open Market Committee (FOMC) meeting. “We see the case for a December insurance cut,” the bank said in a statement. However, it added that the probability of the cut is more 60-40 than the expected 95-5, given the recent uncertainty in economic data.
Despite its revised forecast, Standard Chartered remains cautious about the economic outlook. The bank acknowledged that recent data releases have been limited, making it difficult to predict the exact impact. Still, the bank believes a rate cut is necessary to address slower growth in the U.S. economy.
A Shift in Forecasts from Major Banks
Standard Chartered’s move aligns with similar actions by other major banks. JPMorgan, Morgan Stanley, and Nomura had previously forecast that the Fed would keep rates steady. However, all three banks have since adjusted their predictions, citing weak economic data from November and remarks from key Federal Reserve officials. The shift in forecasts highlights growing concerns over economic growth and inflationary pressures.
Nomura strategists, while predicting the rate cut, also expect the decision to be a close one. They believe that some members of the Federal Reserve may disagree with the 25-basis-point reduction. They anticipate at least one dissenting vote, with one member potentially advocating for a 50-basis-point cut.
What Investors Expect from Wednesday’s Meeting
As the FOMC meeting approaches, market participants are closely monitoring any changes to the Fed’s policy outlook. Investors are particularly focused on how the Federal Reserve will guide its future rate decisions. “It would be irresponsible for the Fed to pre-commit to a six-month rate path,” said Kevin Hassett, a key economic adviser.
This week’s rate decision could mark the third rate cut of 2025. Following the expected rate reduction, investors are eager to hear more about the Fed’s future plans. Financial conditions are already becoming looser with the end of the Fed’s Quantitative Tightening (QT) policy, which could affect asset markets like Bitcoin.
While a rate cut may make Bitcoin more attractive to institutional investors, experts caution that the immediate impact on digital asset prices remains uncertain. The Standard Chartered Bank, along with JPMorgan, Morgan Stanley, and Nomura, expects the Federal Reserve to reduce rates this week. However, the outlook remains fluid, and market participants are awaiting more details on the Fed’s future policy stance.
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Source: https://blockonomi.com/standard-chartered-joins-other-banks-in-predicting-fed-rate-cut-this-week/