The last interest rate meeting of 2024 is over, with the Fed signaling a more hawkish tone, making Wall Street banks more cautious about next year's interest rate path.
At the December interest rate meeting, despite the Fed's expected 25 basis point rate cut,the published interest rate 'dot plot' indicates that there will be only two more rate cuts by 2025.This is half the planned rate cuts compared to the dot plot predictions in September - at that time, four rate cuts were expected next year.
In addition, compared to the US Federal Reserve's monetary policy statement last month, a major change in this month's statement is the addition of the terms 'extent' and 'timing' when discussing future interest rate adjustments.However, these few words changes have actually to some extent released signals of changing the pace of rate cuts.
As we approach the year 2025,Federal Open Market Committee(FOMC) voting members will also undergo annual rotation, and the addition of new members may increase resistance to further rate cuts to some extent.
The Federal Reserve holds eight interest rate meetings annually, where all 12 regional Federal Reserve Bank presidents discuss and debate monetary policy. However, only 7 members of the Federal Reserve Board of Governors and the New York Fed President have fixed voting rights. The remaining 11 regional Federal Reserve Bank presidents, only four have voting rights, rotating annually.
Dow analyst Oscar Munoz stated: This opens the door to more opposing votes for next year.Because the members soon to gain voting rights are becoming more hawkish....