Deutsche Bank still sees a 25bp rate cut in December

Investing.com -- Despite mixed Federal Reserve commentary, Deutsche Bank said it continues to expect a December rate cut, maintaining its long-held view that the central bank will move ahead with a 25-basis-point reduction before pausing for an extended period.

In its latest “DB Fed Watcher” note, Deutsche Bank analysts stated that their base case remains “25bps rate cut December then on hold until Q3 2026.”

The bank added that it expects “one more 25bps cut in September,” delivered under new Fed leadership, implying a 3.375% terminal rate.

The call comes even as Fed speakers offered a wide range of views ahead of the blackout period.

Deutsche Bank highlighted that “regional voters generally leaned against a December rate cut,” while senior officials were more open to further easing.

Some policymakers signaled caution about cutting too quickly, with several arguing that inflation shows “little sign of sustainably returning to 2% in a timely manner” and warning that additional easing could “add to risk of higher inflation.”

Others, however, pointed to labor-market weakness and argued that a December move could serve as insurance.

Still, Deutsche Bank emphasized that the broader debate does not change its outlook: a single cut in December followed by a long pause.

The bank said it sees rates “on hold until Q3 2026,” reflecting a view that the Fed will move carefully as it balances inflation risks with signs of cooling demand.

You May Also Be Interested In

• ​Trump said he was unaware of his earnings from crypto
• Sodexo (SW:FP) (SDXAY) PT Raised to EUR53 at Deutsche Bank
• Raymond James Upgrades Aecon Group (ARE:CN) (AEGXF) to Outperform