The FED could slow down the pace of rate cuts in 2025!

The American Federal Reserve (FED) could slow down its cycle of interest rate cuts in 2025, according to recent statements by its officials. An announcement that sowed panic on Wall Street, where stock indices fell sharply on Friday, shaken by robust economic data! Thus reinforcing the idea that the FED could slow down its monetary easing sooner than expected.

FED: Towards a slowdown in rate cuts in 2025?

Last December, the US Federal Reserve (FED) lowered its key rate for the third consecutive time, setting it in a range of 4.25% to 4.50%. This reduction, however, could be the last for some time. Fed Governor Michelle Bowman recently said the cut represented a final step in recalibrating rates.

At the same time, Wall Street ended lower on Friday, with declines of 1.63% for the Dow Jones and the Nasdaq, while the S&P 500 lost 1.54%. This performance was affected by robust economic data: in December, 256,000 jobs were created, a figure higher than expected, while the unemployment rate fell to 4.1%.

These indicators confirm the strength of the American economy and suggest that the job market remains solid. In this context, the FED could slow down the pace of its rate cuts in 2025, in order to concentrate its efforts on its inflation objective of 2%, still far from the current forecasts of 2.5% for 2025.

What direction will the Federal Reserve take in its next decisions?

The situation remains complex for the FED, which must juggle still high inflation and a growing economy. Some analysts say a rate hike could be necessary if inflation starts to rise again, while others anticipate rates stabilizing to avoid market disruptions.

The FED thus seems to be moving towards a pause in its cycle of rate cuts, preferring to observe the evolution of the economy before taking new measures. This caution could have significant impacts on financial markets and the U.S. economy in the coming months, making future central bank statements crucial for investors.