The Fed is not cutting rates as much as expected, causing uncertainty and market volatility

From Investing.com: 2024-12-23 12:34:00

In a surprise move, the Fed will not cut rates as much as expected, citing uncertainty about the future path of interest rates. Inflation is projected to rise to 2.5% by the end of 2025, reflecting potential trade war impacts. The Fed plans to reduce the rate paid to lenders using the overnight reverse repurchase facility. A hawkish Fed, compared to other global central banks, may boost the U.S. dollar. If the job market cools, consumer spending could moderate, while capital investment demand may rise. The recent FOMC meeting hinted at fewer rate cuts in 2025, causing market uncertainty. Businesses are ramping up R&D spending post-election, with strong capital investment expected. Business sentiment is improving, with higher planned capital spending and consumer optimism. The Fed’s cautious approach may lead to slower rate cuts, impacting market sentiment and potentially creating headwinds for stocks. LPL’s STAAC maintains a neutral equity stance amid stretched sentiment and geopolitical risks.



Read more at Investing.com: The Fed Resets Expectations for Next Year