The Fed’s December rate cut may be the last of the cycle, with fewer cuts expected in 2025

What does this mean for the economy?

Well, if the Federal Reserve decides to cut interest rates in December, it could potentially be the last cut in the current cycle. This could have significant implications for the economy, as fewer cuts in the future would likely lead to higher rates and a stronger dollar. With rising Treasury rates and a stronger dollar, credit spreads could widen, potentially contracting the S&P 500’s PE ratio and affecting equity market valuations.

How will this affect me?

As a consumer, higher rates could mean increased borrowing costs for things like mortgages and credit cards. This could make it more expensive to take out loans or finance big purchases. On the other hand, a stronger dollar could make imported goods cheaper, which could be good news for anyone who enjoys shopping for international products.

How will this affect the world?

The impact of these changes in the US economy could also ripple out to affect the global economy. A stronger dollar could make American exports more expensive for other countries, potentially leading to a decrease in US exports. This could have implications for trade relationships and economic growth worldwide.

Conclusion

In conclusion, the Fed’s December rate cut could mark a turning point in the current economic cycle. With fewer cuts expected in the future, higher rates and a stronger dollar could be on the horizon. It’s important to stay informed and be prepared for any potential changes that could affect both individuals and the global economy.