David McNamara: Fed embarks on an uneasy path of rate cuts

It looks like a solid majority on the Fed is in favour of a cautious approach to rate cuts from here but there remains a wide divergence on the exact path

One outlier Fed member saw 150bps of rate cuts for 2025 as most appropriate, which most observers have attributed to the President’s man, Governor Stephen Miran.

Last week’s US Federal Reserve and Bank of England decisions were as expected, with the former cutting by 25bps and the latter holding. 

With the Fed’s first cut in 2025, both central banks have now reduced rates by 125 basis points (bps) since they started to ease policy in Q3 2024. While the outcome of the Fed meeting was in line with the consensus, there was no unanimity on the magnitude of the rate cut.