The U.S. Federal Reserve is likely to continue easing interest rates gradually. Analysts anticipate a further 25 basis point (0.25%) rate cut in December 2024, bringing the target range to 4.25%-4.50%. This is part of the Fed's ongoing strategy to balance economic growth and inflation, which has been moderating toward the 2% target. Despite this easing, future rate cuts in 2025 are expected to be slower, possibly occurring once per quarter, with a terminal rate of 3.5%
The Fed's policy reflects a cautious approach, given the uncertainty in economic conditions, labor market trends, and potential fiscal policy changes following the recent U.S. presidential election. Core inflation remains slightly elevated at 2.7%, though the headline rate has neared the Fed's target.