Market Outlook: UOB Anticipates Three Rate Cuts from the Fed in 2025

UOB senior economist Alvin Liew argued that it is likely the Fed could make a 75 basis point rate cut next year. Liew noted that it is not surprising for the Fed to signal a slowdown in the pace of easing moving forward, but the markets were surprised by the extent to which future cuts appeared to be reduced. UOB stated that the lower number of cuts reflects expectations of higher inflation pressures coming from potential U.S. trade tariffs under the new Trump administration. UOB also emphasized that they remain committed to their expectation of three Fed rate cuts next year until better clarity is obtained regarding Trump's policies.