Deutsche Bank Analyzes Potential Impact Of FOMC Meeting On Future Interest Rates

According to Odaily, Deutsche Bank has released a report analyzing the implications of this week's Federal Open Market Committee (FOMC) meeting. The report suggests that the Federal Reserve's meeting reinforces the bank's core view that the anticipated rate cut in January might transform into a prolonged pause by 2025. Deutsche Bank maintains that the nominal neutral interest rate is approximately 3.75%, and it is essential for the committee to maintain a restrictive stance relative to this level. Consequently, the bank reiterates its position that the federal funds rate is likely to remain above 4% next year, with no further rate cuts expected under the current baseline scenario. The report also highlights that some Federal Reserve participants have begun to incorporate the potential economic impacts of President-elect Trump's policies into their forecasts. This consideration could lead to higher inflation projections for 2025 and 2026. In terms of the labor market, Federal Reserve Chair Jerome Powell described it as solid but noted that the current level of job creation is below what is necessary to maintain a stable unemployment rate. This assessment underscores the challenges facing the labor market and the broader economic outlook as policymakers navigate the evolving economic landscape.