Danske: Expects the Fed to cut interest rates by 25bp, with a more moderate forward guidance

Jinshi Data News on September 18th, Danske Bank expects the Fed to cut interest rates by 25 basis points, and expects the pace of QT to remain unchanged. The new dot chart will show a total of 3 cuts of 25bp by 2024. Then, there will be 6 cuts of 25bp in 2025. It is expected that there will be no policy interest rate changes in 2026, and the final interest rate will be 3.00-3.25%. It is expected that the inflation forecast for 2024-2025 will be slightly lowered, and the unemployment rate forecast for 2024-2026 will be slightly raised. Powell will convey a series of rate cut information and remain open to larger rate cuts, even if it is not the baseline expectation. A 25 basis point rate cut plus a mild forward-looking guidance may lead to a relatively moderate market response, but the risk is tilted towards a stronger dollar and higher short-term yields.