Stifel economist Lindsey Piegza has indicated that the Federal Reserve is likely to pause its policy adjustments. This expectation arises from recent comments by Federal Reserve Governor Christopher Waller, suggesting that stricter standards are being established in this regard. Federal Reserve officials are increasingly concentrating on whether economic data surpasses expectations, rather than solely focusing on strong economic performance.
If the economy continues to demonstrate significant stability next year, the Federal Reserve may face challenges related to potential interest rate cuts. Piegza anticipates that there will be three more rate cuts next year, bringing rates closer to a neutral level. By the third quarter, it is expected that rates will be reduced to 3.75%, which is considered a reasonable neutral level.
As for this year, if December's data aligns with expectations, Piegza believes the Federal Reserve will proceed with a third round of rate cuts..