(Reuters) -Major brokerages stuck to their predictions on interest rate cuts in 2025, after U.S. inflation data came in line with expectations on Wednesday, easing investor nerves, following a surprisingly strong U.S. employment report last week.
Wells Fargo (NYSE:WFC), however, lowered its forecast to two rate cuts by the Federal Reserve from three after U.S. consumer price index (CPI) showed a marginal rise to 0.4% last month and advanced 2.9% on an annual basis. Economists polled by Reuters had forecast the CPI gaining 0.3% and rising 2.9% from a year earlier.
Market participants are betting on a 34.5 basis point cut by the end of this year, as per data compiled by LSEG.
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 after inflation data:
Rate cut estimates (in bps)
Brokerages Jan 2025 2025 Fed Funds Rate
No. of cuts
in 2025
BofA Global No rate cut No rate cut 4.25-4.50%(end of
Research 0 December)
Barclays (LON:BARC) No rate cut 25 (in June) 4.00-4.25% (end of
1 2025)
BNP Paribas (OTC:BNPQY) No rate cut No rate cut 4.25-4.50%(end of
0 December)
Goldman Sachs No rate cut 50 (June and 3.75-4.00% (through
December) 2 December)
J.P.Morgan No rate cut 50(June and 3.75-4.00% (through
September) - September 2025)
Morgan Stanley (NYSE:MS) No rate cut 50 (through 3.75-4.00% (through
June 2025) 2 June 2025)
Deutsche Bank (ETR:DBKGn) No rate cut No Rate Cuts 4.25-4.50% (end of
0 2025)
ING No rate cut 75 3.50-3.75%
3
UBS Global No rate cut 50 3.75-4.00% (end of
Wealth - 2025)
Management
Citigroup (NYSE:C) No rate cut 125 (starting 3.00-3.25% (end of
in May) 5 2025)
Macquarie No rate cut 25 4.00-4.25%
1
Berenberg No rate cut No rate cut 4.25-4.50% (end of
0 2025)
No 50
Wells Fargo rate cut (September and 2 3.75-4.00% (end of
December) 2025)
Nomura No rate cut - -
1
Here are the forecasts from major brokerages before inflation data:
Rate cut estimates (in bps)
Brokerages Jan 2025 2025 Fed Funds Rate
BofA Global No rate cut No rate cut 4.25-4.50%(end of
Research December)
Barclays No rate cut 25 (in 4.00-4.25% (end of
June) 2025)
Goldman Sachs No rate cut 50 (June 3.75-4.00% (through
and December)
December)
J.P.Morgan No rate cut 75(starting 3.50-3.75% (through
in June) September 2025)
Morgan Stanley No rate cut 50 (through 3.75-4.00% (through
June 2025) June 2025)
Deutsche Bank No rate cut No Rate 4.25-4.50% (end of
Cuts 2025)
ING No rate cut 75 3.50-3.75%
UBS Global No rate cut 50 3.75-4.00% (end of
Wealth 2025)
Management
Citigroup No rate cut 125 3.00-3.25% (end of
(starting 2025)
in May)
Macquarie No rate cut 25 4.00-4.25%
Berenberg No rate cut No rate cut 4.25-4.50% (end of
2025)
Scotiabank (TSX:BNS) No rate cut 50 3.75-4.00% (end of
2025)
Wells Fargo No rate cut - -
* UBS Global Research and UBS Global Wealth Management are distinct, independent divisions in UBS Group