Fed matches rate cut expectations but 'hawkish' outlook sends dollar soaring

Cuts for 2025 tempered

US central bankers voted to cut the federal funds rate by 25 basis points on Wednesday (18 December), bringing down the Federal Reserve’s benchmark rate to 4.25-4.5%.

The vote was almost unanimous, with 11 of the 12 Federal Open Market Committee members voting in favour of the rate trim; only Beth Hammack, president of the Federal Reserve Bank of Cleveland cast her vote in favour of maintaining current interest rates. However, cautious rhetoric from Fed chair Jerome Powell caused Treasuries to topple and the US dollar to soar.  "As for additional cuts, we are going to be looking for further progress on inflation as well as continued strength in the labour market," said Powell, emphasising that the FOMC will remain data-driven into 2025.  Powell ...