That’s according to Josh Jamner (pictured top), investment strategy analyst at asset management firm ClearBridge Investments, who told Mortgage Professional America a December cut was all but fully priced into markets – but there was a clear chance of fewer 2025 reductions than originally expected.
“As we look out to 2025 our base case would be that there could be two interest rate cuts. I think the possibility that there’s only one more cut seems a little bit more likely than three cuts in 2025, for example,” he said.
“But I think the determinants of that will be less about what’s coming out of DC and more about what labor and inflation data look like.”
How is the Fed currently viewing its 2025 path on interest rates?
Perhaps the most telling indicator of the Fed’s likely approach in 2025 is its so-called dot plot – a visual representation of its Federal Open Market Committee’s (FOMC) interest rate projections, published each quarter.
Following Trump’s election win, the proposal to remove Fannie Mae and Freddie Mac from conservatorship has resurfaced, potentially impacting the housing market.https://t.co/kAMYFrDy3y
— Mortgage Professional America Magazine (@MPAMagazineUS) December 16, 2024
The implied neutral rate – the point at which the Fed’s funds rate neither restricts nor boosts the economy – has gone up in a flurry of meetings since last year, Jamner said – “and there’s increasing chatter that the neutral rate could [end up] higher than people believe.”
