Increasing Expectations for Fed to Pause Rate Cuts in January

Forex - Following Standard Chartered, Abrdn analyst Dongyue Zhang stated that the Federal Reserve is likely to pause interest rate cuts in January as it shifts to a slower pace of easing. Abrdn expects a cut in March if inflation continues to cool. Zhang emphasized that the new Trump administration could bring increased volatility following expected policy changes in 2025. Despite the Fed's hawkish stance, Zhang mentioned that Abrdn believes opportunities outweigh the risks, saying, “The benefits brought by deregulation and a more business-friendly environment will pave the way for productivity gains and capital redistribution.” Abrdn also highlighted its expectation that the U.S. economy will remain resilient due to a healthy labor market, expanded capital expenditures related to artificial intelligence, and a stronger capital market.