Deutsche Bank: Fed's Initial Rate Cut Will Shape Overall Rate Reduction This Year

Deutsche Bank market strategist Jim Reid stated in a report that the magnitude of the Federal Reserve's first rate cut will influence the overall rate reduction this year.

If the Fed cuts rates by 25 basis points on Wednesday, Deutsche Bank expects the Fed's forecast to show a total rate reduction of 75 basis points this year. However, if the Fed opts for a 50 basis point cut, they anticipate a total rate reduction of 100 basis points by the year's end.

According to Refinitiv data, uncertainty remains about the extent of the Fed's rate cut this week. Money markets currently project a 59% probability of a 50 basis point cut and a 41% probability of a 25 basis point cut.