--- title: 'Interest Rate Forecast: How Much More Will the Fed Cut?' description: There's now an 88% chance of a 25-point rate cut Dec. 18. Jerome Powell has said the labor market is solid and low inflation is doable. authors: - name: Adam Hardy role: Lead Data Reporter url: https://money.com/author/adam-hardy/ bio: Adam Hardy is a lead data journalist at Money, where he frequently reports on financial barriers that affect low-income Americans. Adam’s work has also appeared in Business Insider, Forbes, Nasdaq, The Penny Hoarder, Yahoo! Finance and more than a dozen local and regional newspapers. education: University of South Florida, BA, Magazine Journalism at_money_since: 2021 articles: 498 covers: - Economy and Politics - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Pets - Professional Services - Retirement - Shopping - Taxes - Technology also_seen_in: - The Penny Hoarder - Forbes Advisor - Creative Loafing - The New York Times - The Washington Post - Bloomberg - Harvard Law School - The Federal Register - National Consumer Law Center - CBS News - Becker's Hospital Review - Business Insider - Mother Jones - The Week - Fortune - The Philadelphia Inquirer - National Association of Student Financial Aid Administrators (NAFSAA) - Education Advisory Board (EAB) - The Institute for College Access & Success (TICAS) - This Morning with Gordon Deal - Empower - Reddit social: - https://www.x.com/hardyjournalism - https://www.linkedin.com/in/hardyjournalism/ editors: - name: Julia Glum role: Managing Editor url: https://money.com/author/julia-glum/ bio: Julia Glum joined Money in 2018 and specializes in covering financial trends that affect everyday Americans' wallets. She also writes Dollar Scholar, a weekly newsletter that teaches young adults how to navigate the messy world of money. education: University of Florida at_money_since: 2018 articles: 453 covers: - Economy and Politics - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Retirement - Shopping - Taxes - Technology also_seen_in: - Newsweek - International Business Times - CBS News - Good Morning America - WUSA9 - Pix 11 - The New York Times - Mashable - The Washington Post - CNBC - Politico social: - https://x.com/superjulia - https://www.linkedin.com/in/julia-glum published: '2024-12-10T19:18:31.000Z' modified: '2024-12-10T19:18:31.000Z' section: Economy and Politics tags: - News word_count: 591 canonical: https://money.com/fed-rate-cut-prediction-december-2024/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Photo collage of the USA Central Bank building with an ascending stock line](https://img.money.com/2024/12/News-Fed-Outlook-Rate-Cuts.jpg) As the Federal Reserve prepares to meet next week for the final time in 2024, analysts are broadly predicting one last rate cut to close out the year. With so many economic uncertainties looming, Wall Street is banking on the Fed to be a source of predictability. Analysts and interest-rate trackers are forecasting a high probability of a 25-point rate cut next week, bringing the federal funds rate down to the 4.25%-to-4.50% range. “COVID-era distortions seem to be fading away,” Elyse Ausenbaugh, head of investment strategy at J.P. Morgan Wealth Management, said in emailed commentary. “A cut in December looks likely.” According to [CME FedWatch](https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html), a popular interest-rate probability tracker, there’s an 88% chance of a 25-point rate cut. A [similar tool](https://www.atlantafed.org/cenfis/market-probability-tracker) from the Federal Reserve Bank of Atlanta predicts a rate cut of that size is 80% likely. The tools predict a 14% and 18% likelihood, respectively, that rates will remain unchanged. After keeping rates at 0% during the pandemic and raising them in 2022 and 2023, the Fed cut interest rates by [25 points in November](https://money.com/fed-rate-cut-mortgages-credit-cards-savings/) and [50 points in September](https://money.com/september-fed-rate-cut-effects/). At a news conference following November’s interest rate cut, Fed Chair Jerome Powell described the labor market as solid and said he sees inflation sustainably cooling to the Fed’s long-run target of 2%. According to the [minutes](https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20241107.pdf) from that meeting, some Fed officials noted that inflation is stickier (aka harder to shake) than expected. Subsequent inflation reports confirmed that, showing headline inflation ticked up slightly in October to 2.6%. Fed officials will reconvene in Washington, D.C., on Dec. 17 and announce their decision Dec. 18. ## Where are interest rates headed in 2025? For 2025, predictions are far less certain. Big picture, experts largely expect inflation to keep cooling and the Fed to continue cutting interest rates. But there are a lot of unknowns with President-elect Donald Trump returning to the White House. “Next year is a different story,” Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management, told [CNBC](https://www.cnbc.com/2024/11/13/cpi-inflation-october-2024.html), “given the uncertainty surrounding potential tariffs and other Trump administration policies.” Zentner explained that markets are already weighing the possibility that the Fed will cut fewer times in 2025 than previously thought and that the Fed may skip a rate cut as soon as the January meeting. J.P. Morgan is [now forecasting](https://www.jpmorgan.com/insights/global-research/economy/fed-rate-cuts) four rate cuts next year, one per quarter, changing its previous prediction of one 25-point cut at each of the eight Fed meetings next year. The firm now expects the Fed to stop cutting rates once they reach 3.5% — up from an earlier forecast of 3%. According to Sofia Baig, an economist at research firm Morning Consult, tariffs — and even the *threat* of tariffs — could stoke inflation and complicate the Fed's monetary policy plan next year. “Supply chains are already showing signs of reheating,” she said in emailed commentary, “and could be facing more headwinds in 2025 with potential economic policies like broad based tariffs.” On Sunday, Trump clarified at least one major question mark for the Fed. In an [interview](https://www.nbcnews.com/politics/donald-trump/trump-interview-meet-press-kristen-welker-election-president-rcna182857) for NBC's *Meet the Press*, the president-elect indicated he does not have plans to tell Powell to resign, quelling rumors that he may install a new Fed chair. A Trump appointee, Powell has chaired the Fed since 2018. ## Buy your new home with more convenience and less hassle ### A Mortgage Expert at Rocket Mortgage (NMLS #3030) can lend you a hand for a smoother process. Your dream home is possible. Click below to make it happen. [View Rates](https://money.com/pr/u918d32af718?ap_referrer=%2Ffed-rate-cut-prediction-december-2024%2F) ![](https://s3.consumersadvocate.org/prd/image/image/26681/medium_57f09f10-efb8-487d-a73e-5f7d605144eb.png) Imagine finally owning your dream home — Rocket Mortgage (NMLS #3030) can help! 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