Economists: The Federal Reserve (FED) may cut interest rates by 50 basis points in December.

On June 3, ING economist Knightley said that the Fed may not cut rates until December, but will opt for a large 50bp cut. The economist said that the Fed will not cut interest rates immediately due to the inflationary impact of tariffs. However, the impact of tariffs on prices will be one-off. This will allow the central bank to boost the slowing economy by cutting interest rates at a later date. U.S. money markets are currently pricing in a high probability of a rate cut in September. However, Knightley said the Fed is also likely to wait longer rather than opt for a larger rate cut in December. ( gold ten )