Commerzbank Analysis: Fed Likely to Pause Further Rate Cuts

Fed May Slow Down Rate Cut Momentum

According to a recent report from Commerzbank, despite weak employment growth, improving economic conditions provide the Federal Reserve with a rationale to delay further rate cuts. Economist Christoph Baltz noted that the current monetary policy is no longer clearly restrictive, with interest rates approaching the upper end of the neutral range.

Policy Turning More Neutral

While employment data remains subdued, the stabilization of unemployment indicates that the U.S. labor market is gradually adapting to the evolving economic environment. In this context, the urgency for the Fed to implement additional rate cuts has significantly diminished.

End of Powell's Term Approaching

Notably, Fed Chair Jerome Powell's term will conclude in May, and it's unlikely the Fed will make a new rate cut decision before then. This timeline offers more observation opportunities for policy adjustments and reflects the Fed's cautious stance toward the current interest rate level.