DBS Bank: The Federal Reserve will cut interest rates less than market expectations

Taimur Baig, chief economist at DBS, said that while the market expects three rate cuts in the fourth quarter of 2025 and three more next year, the bank expects the Federal Reserve to cut interest rates only two more times in 2025 and only one more time in 2026. The bank insists that the current rate-cutting cycle will stall after a cumulative 100 basis points of rate cuts. Baig pointed to US tariff policy, labor market tightness due to immigration controls, tax cuts, strong household and business finances, a surge in AI-related energy demand, and a continued rise in the stock market, all of which will trigger inflation risks. With current inflationary pressures higher than a year ago, he believes that the mainstream view of the FOMC (FOMC) on the 3.5% end point rate is difficult to be shaken. (Jin Ten)