Factbox-Most brokerages stick to their Fed rate cut predictions after CPI data

(Reuters) -Major brokerages stuck to their predictions on interest rate cuts in 2025, after U.S. inflation data came in line with expectations on Wednesday, easing investor nerves, following a surprisingly strong U.S. employment report last week.

Wells Fargo, however, lowered its forecast to two rate cuts by the Federal Reserve from three after U.S. consumer price index (CPI) showed a marginal rise to 0.4% last month and advanced 2.9% on an annual basis. Economists polled by Reuters had forecast the CPI gaining 0.3% and rising 2.9% from a year earlier.

Market participants are betting on a 34.5 basis point cut by the end of this year, as per data compiled by LSEG.

After cutting rates by a quarter of a percentage point at the Dec. 17-18 meeting, Fed Chair Jerome Powell said policymakers could now be "cautious" about further reductions.

Here are the forecasts from major brokerages after inflation data:

Rate cut estimates (in bps)

Brokerages Jan 2025 2025 Fed Funds Rate

No. of cuts

in 2025

BofA Global No rate cut No rate cut 4.25-4.50%(end of

Research 0 December)

Barclays No rate cut 25 (in June) 4.00-4.25% (end of

1 2025)

BNP Paribas No rate cut No rate cut 4.25-4.50%(end of

0 December)

Goldman Sachs No rate cut 50 (June and 3.75-4.00% (through

December) 2 December)

J.P.Morgan No rate cut 50(June and 3.75-4.00% (through

September) - September 2025)

Morgan Stanley No rate cut 50 (through 3.75-4.00% (through

June 2025) 2 June 2025)

Deutsche Bank No rate cut No Rate Cuts 4.25-4.50% (end of

0 2025)

ING No rate cut 75 3.50-3.75%

3

UBS Global No rate cut 50 3.75-4.00% (end of

Wealth - 2025)

Management

Citigroup No rate cut 125 (starting 3.00-3.25% (end of

in May) 5 2025)

Macquarie No rate cut 25 4.00-4.25%

1

Berenberg No rate cut No rate cut 4.25-4.50% (end of

0 2025)

No 50

Wells Fargo rate cut (September and 2 3.75-4.00% (end of

December) 2025)

Nomura No rate cut - -

1

Here are the forecasts from major brokerages before inflation data:

Rate cut estimates (in bps)

Brokerages Jan 2025 2025 Fed Funds Rate

BofA Global No rate cut No rate cut 4.25-4.50%(end of

Research December)

Barclays No rate cut 25 (in 4.00-4.25% (end of

June) 2025)

Goldman Sachs No rate cut 50 (June 3.75-4.00% (through

and December)

December)

J.P.Morgan No rate cut 75(starting 3.50-3.75% (through

in June) September 2025)

Morgan Stanley No rate cut 50 (through 3.75-4.00% (through

June 2025) June 2025)

Deutsche Bank No rate cut No Rate 4.25-4.50% (end of

Cuts 2025)

ING No rate cut 75 3.50-3.75%

UBS Global No rate cut 50 3.75-4.00% (end of

Wealth 2025)

Management

Citigroup No rate cut 125 3.00-3.25% (end of

(starting 2025)

in May)

Macquarie No rate cut 25 4.00-4.25%

Berenberg No rate cut No rate cut 4.25-4.50% (end of

2025)

Scotiabank No rate cut 50 3.75-4.00% (end of

2025)

Wells Fargo No rate cut - -

* UBS Global Research and UBS Global Wealth Management are distinct, independent divisions in UBS Group

(Compiled by the Broker Research team in Bengaluru; Edited by Alden Bentley, Shinjini Ganguli, Maju Samuel, Devika Syamnath, Shounak Dasgupta, Diane Craft and Anil D'Silva)