Economic Buzz: Moody?s expects Fed to steadily lower the federal funds rate to 3.00-3.25%

Moody?s in its Global Macro Outlook on Thursday stated that the Fed will continue to ease monetary policy at its upcoming meetings to bolster the labor market, while tolerating temporary above-target and tariff-induced inflation. We expect it will steadily lower the federal funds rate to 3.00-3.25% over the next few meetings, the ratings agency said. The ECB is likely at the end of its easing cycle because euro area inflation is close to the 2% target. Meanwhile, the BoE held rates steady for its second consecutive meeting in November and we expect it to take a slower approach to rate cuts as it balances sticky inflation against fiscal uncertainty. The BoJ remains committed to normalizing policy and we expect it to gradually hike its policy rate to 1%. Among G-20 emerging markets, monetary policy is similarly varied. China's central bank is maintaining a moderately loose stance by providing ample liquidity, lowering borrowing costs and maintaining yuan stability. In India, the RBI held its repo rate steady in October, showing that it is cautious on policy with inflation subdued and growth strong, Moody?s further noted.

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