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WORLD | Jan 13, 2025

Brokerages scale back predictions for 2025 Fed cuts after payrolls data

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FILE PHOTO: Barclays Bank logo and decreasing stock graph are seen in this illustration taken March 12, 2023. REUTERS/Dado Ruvic/Illustration/File Photo

(Reuters)

Several major brokerages have tempered their predictions for how much the Federal Reserve will lower interest rates in 2025, if at all, after a surprisingly strong U.S. employment report on Friday pointed to resilient economic growth.

At least one brokerage, BofA Global Research, said in a note it thought the easing cycle was over and it was likely the Fed would hold for an extended period. “But we think the risks for the next move are skewed toward a hike.”

After cutting rates by a quarter of a percentage point at the Dec. 17-18 meeting, Fed Chair Jerome Powell said policymakers could now be “cautious” about further reductions.

Here are the forecasts from major brokerages for 2025 after the jobs report: (Rate cut estimates (in bps))

BrokeragesJan 20252025Fed Funds Rate
BofA Global ResearchNo rate cutNo rate cut4.25-4.50%(end of December 2025)
BarclaysNo rate cut25 (in June)4.00-4.25% (end of 2025)
Goldman SachsNo rate cut50 (June and December)3.75-4.00% (through December 2025)
J.P.MorganNo rate cut75 (starting in June 2025)3.50-3.75% (through September 2025)
Morgan StanleyNo rate cut50 (starting in June 2025)3.75-4.00% (through June 2025)
Deutsche BankNo rate cutNo rate cuts4.25-4.50% (end of 2025)
INGNo rate cut753.50-3.75%
UBS Global Wealth ManagementNo rate cut503.75-4.00% (end of 2025)
CitigroupNo rate cut125 (starting in May 2025)3.00-3.25% (end of 2025)
MacquarieNo rate cut254.00-4.25%
BerenbergNo rate cutNo rate cut4.25-4.50% (end of 2025)
ScotiabankNo rate cut503.75-4.00% (end of 2025)
Wells FargoNo rate cut
  • UBS Global Research and UBS Global Wealth Management are distinct, independent divisions in UBS Group

Here are the forecasts from major brokerages for 2025 before the jobs report: (Rate cut estimates (in bps))

BrokeragesJan 20252025Fed Funds Rate
BofA Global ResearchNo rate cut503.75-4.00% (end of June)
BarclaysNo rate cut503.75-4.00% (end of June)
Goldman SachsNo rate cut75 (through September 2025)3.50-3.75% (through September 2025)
J.P.Morgan No rate cut75 (through September 2025)3.50-3.75% (through September 2025)
Morgan StanleyNo rate cut503.75-4.00% (through June 2025)
NomuraNo rate cut254.00-4.25% (through end of 2025)
*UBS Global ResearchNo rate cut1253.00-3.25% (through end of 2025)
Deutsche BankNo rate cutNo rate cut4.25-4.50%
Societe GeneraleNo rate cut3.00-3.25% (by early 2026)
INGNo rate cut753.75 – 4.00%
MacquarieNo rate cut254.00-4.25%
UBS Global Wealth ManagementNo rate cut503.75-4.00% (end of 2025)
Peel HuntNo rate cut503.50-4.00%

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