Fed Focuses on Curbing Inflation Instead of Stimulus, Postpones Interest Rate Reductions

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Fed Focuses on Curbing Inflation Instead of Stimulus, Postpones Interest Rate Reductions

Bitget-RWA2025/11/21 07:14

By:Bitget-RWA

- JPMorgan withdraws December Fed rate-cut forecast as market odds drop below 50%, reflecting uncertainty over central bank easing timelines. - Gold and Bitcoin decline amid "risk-off" sentiment, with traders scaling back bets on Fed accommodation and asset prices adjusting to prolonged high rates. - Fed officials emphasize cautious approach to inflation control, prioritizing labor market stability over premature cuts, with 2025 easing limited to one or two 25-basis-point reductions. - Internal Fed divisio

JPMorgan Chase & Co. has retracted its forecast for a Federal Reserve rate cut in December, mirroring a wider market shift in expectations as recent economic indicators and central bank commentary point to a more measured approach. This adjustment highlights increasing ambiguity regarding when the Fed might begin easing, with market participants now assigning less than a 50% probability to a rate cut at the December 10 meeting,

a decrease from over 60% at the end of October

. This change has reverberated across financial markets, putting pressure on precious metals and cryptocurrencies and intensifying focus on the Fed’s efforts to balance inflation management with employment concerns.

The upcoming Fed rate decision on December 10 remains a central event, though policymakers have indicated they prefer to wait for more definitive economic trends before making any moves.

Recent figures, such as a two-month peak in U.S. jobless claims

, have sparked some hope for a rate cut in December, but this optimism is being moderated by Fed officials’ cautions about acting too soon. “The economic trade-offs call for a slow and steady approach,” Fed Vice Chair Philip Jefferson commented recently,

stressing the importance of not overreacting to short-term softness in the labor market

. This perspective has strengthened the consensus that any rate reductions in 2025 will likely be limited to one or two 25-basis-point moves,

with more substantial easing probably postponed until 2026

Fed Focuses on Curbing Inflation Instead of Stimulus, Postpones Interest Rate Reductions image 0

The reduction in expectations for rate cuts has already influenced asset valuations.

Gold futures declined for a fourth straight day

as traders reduced their expectations for Fed easing, ending at $4,061.30 per ounce, a 3.4% drop over four sessions. Likewise,

Bitcoin

fell below $90,000 on November 18, marking its lowest point since April 2025, as the cryptocurrency sector contends with economic uncertainty and a lack of clear drivers. Experts attribute the broader downturn to a “risk-off” sentiment, with investors adjusting to the likelihood of sustained higher interest rates.

The minutes from the Fed’s October 28-29 meeting, due out November 19, may offer additional insight.

Although some policymakers have supported rate reductions

, internal disagreements remain, especially regarding persistent inflation and the state of the job market.

Fed Governor Christopher Waller recently stated

that core inflation is close to the 2% goal and that employment growth has slowed significantly, reinforcing the argument for patience. On the other hand, analysts suggest that political factors and possible structural economic changes could prompt the Fed to speed up rate cuts in 2026

in their view

At present, investors are preparing for an extended phase of elevated rates,

with bond markets anticipating a slow move down

toward 3% by the middle of 2026. JPMorgan’s updated outlook highlights this adjustment, reflecting the Fed’s focus on curbing inflation rather than providing immediate economic support.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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