Fed delivers a hawkish rate cut

The Fed did cut interest rates by an additional 25bp today, as was largely expected, taking the fed funds rate down to between 4.25% and 4.50%. But the vote was not unanimous and, in a hawkish shift, the new median projection now shows only 50bp of additional loosening next year, down from 100bp in the September projection. We now expect the Fed to cut rates by a cumulative 50bp next year too – with 25bp reductions coming at the March and June FOMC meetings.