The Fed’s Next Move — One More Cut, or a Strategic Pause?
After three decades following the Federal Reserve’s every move, I’ve learned that what matters most isn’t the cut itself — it’s what the cut implies about confidence.
This week, the Fed delivered a 25-basis-point rate cut, as widely expected, to cushion a softening job market.
Yet, Chair Jerome Powell’s cautionary tone — citing missing government data from the shutdown — reminded investors that the next move will depend on clarity, not momentum.
And so, the market waits.
1️⃣ Consensus Forms — Carefully
According to LSEG data, traders now price in a 67.9% chance of another 25-bps cut in December.
That probability reflects both optimism and restraint — the hallmark of a late-cycle policy phase.
Brokerage forecasts tell the same story:
| Brokerage | Expected Cuts (2025) | End-2025 Rate Target |
|---|---|---|
| Citigroup | 1 (25 bps) | 3.00–3.25% (by Mar 2026) |
| Goldman Sachs | 1 | 3.50–3.75% |
| JPMorgan | 1 | 3.50–3.75% |
| Wells Fargo | 1 | 3.50–3.75% |
| Morgan Stanley | 1 | 3.50–3.75% |
| Deutsche Bank | 1 | 3.50–3.75% |
| Barclays | 1 | 3.50–3.75% |
| HSBC | 1 | 3.50–3.75% |
| BNP Paribas | 1 | 3.50–3.75% |
| Nomura | 0 | 3.75–4.00% |
| BofA Global Research | 0 | 3.75–4.00% |
| UBS Global Research | 1 (by Q1 2026) | 3.25–3.50% |
| Standard Chartered | 1 | 3.50–3.75% |
In short: the street is converging on one more cut, and then a pause.
This would bring the Fed Funds Rate to around 3.5–3.75% by year-end 2025 — a gentle glide path, not an abrupt pivot.
2️⃣ The Message Between the Lines
Each cut now has a dual purpose:
- Support employment and credit stability, as fiscal noise clouds visibility;
- Re-anchor expectations that the Fed can stay ahead of disinflation, not behind it.
This is less about stimulus — and more about engineering a soft landing without reigniting volatility.
In other words, the Fed isn’t just managing rates anymore.
It’s managing market psychology — the real rate that drives behavior.
3️⃣ What This Means for Investors
The coming months will define the next market regime:
- Equities may continue to benefit from liquidity tailwinds, especially if December brings another cut.
- Fixed income will hold its allure, with yields stabilizing around an attractive midpoint.
- The dollar may face softening pressure, particularly if global central banks follow the easing path.
For portfolio managers, this is the time to rebalance with precision — not chase direction.
Because when the Fed pauses, markets resume leadership.
🔹 Closing Thought
Policy cycles are measured in data, but priced in conviction.
Whether December delivers another cut or not, the Fed’s signal is clear:
the age of aggressive tightening is over — the age of managed normalization has begun.
For seasoned investors, that means one thing:
The next opportunity lies not in volatility — but in patience.