Fitch Predicts 25 Basis Point Fed Rate Cuts in November and December

Fitch Ratings Predicts Federal Reserve Interest Rate Cuts Ahead

According to recent forecasts from Fitch Ratings, significant changes are anticipated in the Federal Reserve's monetary policy in the coming months. This article will explore the implications of these expected rate cuts and their potential impact on the U.S. economy.

Projected Rate Cuts in November and December

Fitch Ratings has projected that the Federal Reserve will implement a 25 basis point rate cut during its upcoming meetings in November and December. This decision aligns with the Fed’s ongoing efforts to manage economic conditions more effectively.

Moderate Easing Cycle Expected

Despite the anticipated cuts, Fitch emphasizes that the easing cycle by the Federal Reserve is expected to remain moderate. This means that while interest rates may go down, the overall approach of the Fed will not be radically aggressive.

Impact on the U.S. Job Market

Fitch's forecast also predicts that the U.S. job market will not experience significant deterioration due to these rate reductions. This is a crucial aspect, as it suggests that the labor market will remain relatively stable even as interest rates adjust.

Future Projections for Federal Funds Target Rate

• By the end of 2023, the federal funds target rate (upper limit) is expected to decrease to 4.5%.
• Looking ahead, it is anticipated to further drop to 3.5% by the end of 2025.
• The rate is projected to reach a neutral level of 3.0% by June 2026.

Conclusion

The anticipated rate cuts by the Federal Reserve as projected by Fitch Ratings could have far-reaching implications for the U.S. economy. However, the expectation of a stable job market amidst these changes provides a silver lining for economic resilience.

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