The US Federal Reserve (FED) announced important interest rate decisions last night. The 25 basis point rate cut was in line with expectations, but Fed Chairman Jerome Powell remained hawkish.
Powell said most Fed officials want to delay rate cuts. He noted that some member countries are likely to take a wait-and-see attitude after two consecutive interest rate cuts, adding: “A December rate cut is not a certainty.”
At this point, Japanese giant Nomura has revised its December rate cut forecast, with expectations for a December rate cut significantly lower.
Nomura currently expects the Fed to keep interest rates unchanged at its December policy meeting.
Governor Niimura had previously predicted a 25 basis point (bp) rate cut in December.
“While the numbers for the coming months are likely to be somewhat dovish, we do not believe this weakness will be enough to reignite the FOMC’s concerns about a deteriorating labor market,” Nomura said in a memo, according to Reuters.
However, Nomura maintained its rate cut forecast for 2026, saying it expects three cuts of 25 basis points in March, June and September 2026.
As a result, Fed Chairman Jerome Powell’s unexpectedly hawkish comments dealt a major blow to markets that had been expecting further interest rate cuts this year.
According to FedWatch from the Chicago Mercantile Exchange (CME), there is currently a 70.4% chance that interest rates will stabilize at a range of 3.75% to 4.00% at the December FOMC meeting, and a 29.6% chance of a rate hike.
*This is not investment advice.
