What Are the Current Expectations for Fed Interest Rate Cuts?

Forex - Christopher Wong from OCBC argued that the markets' hawkish repricing of expectations for a Fed rate cut appears somewhat exaggerated in the context of a cooling labor market in the U.S. The strategist noted that the recent FOMC provided guidance for a slower pace of rate cuts and lower cut amounts in 2025 and 2026. Wong mentioned that this has shaken the U.S. dollar and indicated that the markets are not currently fully pricing in another cut until June 2025 and only 38 basis points of easing for the year. "We warn that market pricing can be volatile," said Wong, adding, "If the data comes in softer, pricing may be recalibrated, and the U.S. dollar could weaken." Wong also pointed out that the dollar's gains following the FOMC have retraced by 50% after the core PCE disappointed.