Traders are adjusting their expectations regarding interest rate cuts from the Bank of England (BoE) and the Federal Reserve. Recent analyses indicate that traders are no longer fully pricing in two rate cuts by the BoE for the upcoming year, now forecasting a single cut of 50 basis points in 2025. Additionally, there is only a 50% chance of a rate cut occurring in February. In contrast, traders are now favoring three rate cuts by the BoE in 2025. Meanwhile, U.S. rate futures suggest a shift towards fewer cuts, with only one 25 basis point cut anticipated in 2025, down from previous expectations of multiple cuts. Traders are also keeping bets on a pause in January for the Fed, while adding to expectations for a rate cut in March, with another cut projected by October.
After PCE, the market is now pricing in 45.7 bps in easing in 2025 compared to 48.3 bps before the FOMC. https://t.co/BXSiyowBPt
Buyable dip, IMHO. Infra spend will be substantially larger in 2026 than consensus. Fed will cut. PCE will hit 2.0% by April. https://t.co/ZiSdLGYODp
Traders of rate futures Keeps bets for a Fed pause in January but increase expectations for a rate cut in March, with another cut priced in by October.