Traders see just three Fed rate cuts in 2025, starting in June

(Reuters) -Traders on Wednesday sharply trimmed their bets on Federal Reserve interest-rate cuts after U.S. President Donald Trump said he was further increasing tariffs on China but pausing for 90 days the big tariff increases he had announced last week for most other countries.

Traders of futures that settle to the Fed policy rate now see the Fed waiting until June to start to interest-rate cuts, and to deliver just 75 basis points of reductions over the course of the year.

Earlier on Wednesday, as stock-market turmoil and a sharp rise in Treasury yields expressed investors' fear of an economic downturn, traders had placed heavy bets on a May start to Fed rate cuts and four, if not more, quarter-point rate cuts over the course of 2025.

(Reporting by Ann Saphir; Editing by David Gregorio)

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