①Nomura Securities The firm stated that after the Federal Reserve announced a rate cut on Wednesday, it now expects the Fed to keep rates unchanged at its December policy meeting; earlier this month, the Japanese brokerage had predicted that the Fed would cut rates by 25 basis points in both October and December.
Nomura Securities stated that following the Federal Reserve's rate cut announcement on Wednesday, the firm now expects the Fed to keep rates unchanged at its December policy meeting.
Earlier this month, the Japanese brokerage firm had predicted that the Federal Reserve would cut interest rates by 25 basis points in October and December, respectively.
The Federal Reserve cut interest rates by 25 basis points on Wednesday, as expected by the market, in an effort to curb further weakness in the job market. However, Fed Chairman Jerome Powell unexpectedly delivered a straightforward message to investors who believed the Fed would inevitably cut rates for the third time this year in December: not so soon.
Powell specifically highlighted the divisions within the Federal Open Market Committee (FOMC) and downplayed the view that a rate cut in six weeks was a foregone conclusion. When discussing bets on a December rate cut, he stated at one point, "In fact, it's far from that."
In response, Nomura Securities stated in a report on Wednesday evening: "The data in the coming months may be slightly dovish, but we believe the weakness will not be enough to reignite the FOMC's concerns about a deteriorating labor market."
Nomura economist David Seif stated, "Not all labor market slowdowns are the same. In the case of the slowdown we are experiencing, this is almost as mild as it could be. People are not being laid off. What is really causing the decline in consumer spending is large-scale layoffs."
Regarding the interest rate outlook for next year, Nomura Securities expects the Federal Reserve to cut interest rates by 25 basis points each in March, June, and September 2026.
According to the CME Group's FedWatch Tool, interest rate market traders now estimate a roughly 70% chance of a Fed rate cut in December, significantly lower than Tuesday's estimate of around 90%—indicating that traders have received a signal from Fed Chairman Powell that a December rate cut is not a certainty. However, they still believe the probability of a rate cut is slightly greater than the probability of no rate cut.
(Article source: CLS)
