In a client note Deutsche Bank is cautioning against expectations for significant rate cuts by the Federal Reserve, citing robust economic growth and persistent inflationary pressures.
While the bank’s baseline scenario envisions a 25-basis-point rate cut in December, it notes this is a “close call” and far from certain.
Beyond that, Deutsche Bank anticipates an extended pause in monetary easing, with the federal funds rate remaining above 4% through 2026. This outlook suggests the Fed will maintain a cautious approach, balancing the need to support economic growth while ensuring inflation does not resurge. Investors banking on rapid rate reductions may need to adjust their expectations.
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