David McNamara: US Fed has roiled markets with its 'hawkish cut'

Of the 19 voting members on the FOMC, 15 judged the risks to the inflation outlook to be tilted to the upside, compared to just three in September, with President Trump’s policies widely expected to boost inflation further in the coming years

Chair Jerome Powell’s comments were perceived as more hawkish than expected.

The December meeting of the US Federal Reserve Open Market Committee (FOMC) saw the central bank cut interest rates for the third consecutive meeting. The target range for the Fed funds rate was reduced by 25 basis points (bps) to 4.25-4.50%, bringing the total rate cuts in 2024 to 100bps. 

Markets were teed up for a rate cut, but Chair Jerome Powell’s comments were perceived as more hawkish than expected, leading to a sell-off in US equities, a rise in rate expectations, and a further strengthening in the dollar.