In a December meeting that will be remembered for its seismic impact on markets, the Federal Reserve delivered a widely anticipated 25-basis-point interest rate cut Wednesday, bringing the target range to 4.25%-4.5%.
Yet, it wasn’t the rate cut itself that shocked Wall Street: it was the Fed’s revised economic forecasts and Chair Jerome Powell’s stance that crushed expectations for deeper rate cuts in 2025.
In its December economic forecasts, the Fed raised inflation projections for 2025, signaling that only two rate cuts might be on the table for the year. This marked a dramatic shift from the expectations that had fueled investor optimism in recent weeks.
Powell cemented this hawkish tone during the press conference, stating that after a 100-basis-point reduction in 2024, the Fed would enter a …
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