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Market expectations of US Fed actions signal a worrisome growth outlook
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US economic growth is likely to remain soft well into 2026, with limited policy options to fight the slowdown.
PHOTO: REUTERS
Arup Raha
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SINGAPORE - By most measures, it has been a chaotic year in financial markets and consequently a difficult time for decision-makers. One such decision appears to have been resolved on Sept 17 as the US Federal Reserve cut the policy rate for the first time in 2025.
It was a small 25-basis-point (bp) move and the financial markets cheered it. Or at least, they cheered it for a while, until it probably dawned on them that the Fed was cutting rates even with inflation well above its informal target of 2 per cent. Moreover, the financial markets expect another 50 bps of rate cuts in 2025, and two more cuts of 25 bps each in 2026.
