TD Securities: The Federal Reserve will arrive at the neutral interest rate level later

Golden Finance reported that according to TD Securities, the latest market reaction after Trump’s victory indicates that the market expects a combination of tax cuts and tariffs, which will push up the neutral interest rate of the Federal Reserve. We are revising our forecasts for the Fed as inflation rises to slow the pace of rate cuts in 2025. We now expect the Fed to cut rates by 25 basis points each in November, December, and January, before pausing them in March. The Fed will continue its “cut-pause-cut” pace in 2025, lowering the Intrerest Rate to 3.5% by the end of 2025, which is higher than the previous forecast of 3.0%. In the first half of 2026, the Federal Reserve will cut interest rates to 3.0%, which means we haven’t seen any changes in the neutral Interest Rate, just that the Federal Reserve will arrive there later. (Jinshi)