Tisco ESU expects more Fed rate cuts

The Federal Reserve is expected to lower its policy rate by 50 basis points (bps) this year to counter growing weakness in the labour market, followed by another reduction of 25-50 bps next year to avoid the US economy sliding into recession, says Tisco Bank's Economic Strategy Unit (ESU).

- NUNTAWUN POLKUAMDEE

The two cuts this year are anticipated in September and December after the Fed has kept rates at 4.25-4.50% since early 2025 to contain inflation, said Tanapat Dhanachata, research assistant at Tisco ESU.

The potential cuts are driven by signs of fragility in the US labour market, particularly the slowing pace of non-farm payroll growth, he said.

"Fed chairman Jerome Powell’s more

We see less room for aggressive cuts, citing structural shifts in the labour market and inflation remaining above the Fed’s target.

TANAPAT DHANACHATA

Research assistant, Tisco ESU