93% Experts Anticipate A Fed Rate Cut, Yet Not Everyone Agrees It's The Right Decision: 'President-Elect Trump Is Offering Us A Mix Of Inflationary And Disinflationary Policies'

In a recent survey, the Federal Reserve is anticipated to announce a reduction in interest rates this Wednesday, despite ongoing debates about the appropriateness of such a move.

What Happened: A December survey indicates that the Federal Reserve is poised to reduce interest rates on Wednesday. However, there is debate over whether this is the appropriate course of action, as per a December survey by CNBC, reported on Tuesday.

The survey, which included 27 respondents such as economists and fund managers, found that 93% anticipate a quarter-point rate cut. Yet, only 63% agree it is the right decision. The forecast for 2025 suggests just two more quarter-point reductions, bringing the rate to 3.8% by next year and 3.4% by 2026.

Uncertainty surrounds the fiscal policies of the incoming administration, with opinions ranging from concerns about inflation to optimism for growth. Economist?Robert Fry?expressed uncertainty about the inflation outlook due to mixed policies from President-elect?Donald Trump.

"I can't remember being this uncertain about the inflation outlook," he said. "President-elect Trump is offering us a mix of inflationary (tariffs, individual tax cuts) and disinflationary (deregulation, spending cuts) policies. Who knows what combination we're going to end up with?"

Respondents are divided on the potential growth effects of the new administration’s policies, with 41% seeing them as positive and 41% as negative. Tariffs and deportation threats are seen as significant risks to economic expansion.

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Despite a strong economy, the survey highlights concerns over tariffs and the potential deportation of essential workers, which could impact growth.

Why It Matters: The Federal Reserve is widely expected to announce a 25-basis-point rate cut on Dec. 18, marking its third consecutive reduction after slashing rates by 50 basis points in September and by 25 in November. Markets have fully priced in this move, assigning nearly a 100% probability, according to the CME FedWatch tool. However, the real focus should be on the signals embedded in the Fed’s updated Summary of Economic Projections (SEP) and Chair Jerome Powell’s press remarks that could shape 2025’s monetary policy trajectory.

Traders betting on aggressive rate cuts in 2025 might face a reality check, as the Fed’s December meeting could signal a more cautious approach. Policymakers are expected to project only three interest rate cuts for next year, with the federal funds rate range likely to be 3.5%-3.75% by December 2025, as per a Bloomberg survey.

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Disclaimer: This content was partially produced with the help of?Benzinga Neuro?and was reviewed and published by Benzinga editors.

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