Nomura now sees only one Fed price lower in 2025 after Trump win

Nomura anticipates that the Fed will reply cautiously to a Trump administration centered on tariffs and tax insurance policies, which might be inflationary and growth-dampening. The Fed is predicted to make two extra cuts this 12 months, with just one lower in 2025, adopted by a pause and gradual easing in 2026.

Key Factors:

• Financial Coverage Focus: Nomura expects Trump’s second time period to prioritize tariffs and tax insurance policies, which might improve inflation and scale back development.
• Fed Fee Minimize Path: Nomura now expects the FOMC to ease twice extra this 12 months, adopted by only one lower in 2025. Nomura then anticipate a chronic pause, adopted by 50bp of cuts in mid-2026.
• Raised Terminal Fee: Nomura has raised its terminal price forecast to three.625% (from three.125%) as a result of anticipated inflationary pressures from tariffs.

Conclusion:

Nomura expects a cautious Fed response below a second Trump administration, with gradual cuts because the FOMC navigates inflationary pressures from tariffs. The up to date terminal price displays a cautious stance, balancing inflation dangers with the potential for slower development.

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This text was written by Adam Button at www.ubaidahsan.com.



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