Nomura Signals Fed Rate Cut Pause Amid Political Shifts

Nomura, a major global brokerage, predicts the U.S. Federal Reserve will pause rate cuts in December, following Trump's election victory. The brokerage anticipates only two rate reductions in March and June 2025, citing the Fed's cautious stance amidst economic growth and inflation concerns.

The U.S. Federal Reserve is expected to pause its rate cuts at December's policy meeting, as analyzed by Nomura, marking it the first global brokerage to project a pause in the Fed's rate reduction cycle after Donald Trump's election victory.

Nomura forecasts only two rate cuts of 25 basis points each, at its meetings in March and June in 2025, keeping its Fed funds rate prediction steady at 4.125% through the next year. Currently, the Fed's overnight interest rate ranges between 4.50% and 4.75%, following a 75 basis points reduction in 2024.

Other global brokerages like Goldman Sachs and J.P. Morgan foresee the Fed implementing a 25 basis-point cut next month. However, Nomura suggests that recent hawkish statements from policymakers amidst sustained economic growth and prospective inflation have led to the Fed's inclination toward maintaining rates, rather than rushing to reduce them.

(With inputs from agencies.)