Wall Street has lowered expectations for a third consecutive cut in US interest rates, amid confirmation from Federal Reserve officials that September's 3% inflation rate remains above the 2% target, reducing the justification for lowering borrowing costs.
The probability of a quarter-point interest rate cut at the upcoming December meeting has dropped from about 70% to 40% following comments from members of the Federal Open Market Committee about the lack of clear support for any further reduction.
Federal Reserve Chairman Jerome Powell has previously indicated that an interest rate cut is not inevitable, predicting a split between Fed hawks and doves, making the decision of the next meeting highly anticipated by investors.
In previous meetings, the Fed cut borrowing costs by a quarter of a percentage point due to a weak labor market, with President Trump’s tariffs having a limited impact on inflation.
Economic experts warn that the outcome of the December meeting could be controversial, while analysts such as Jonathan Millar of Barclays and Krishna Guha of Evercore stress the difficulty of predicting the direction of the Fed's final decision.
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