DBS Bank says the market is expecting a series of interest rate cuts by the Federal Reserve, but aggressive market pricing could lead to disappointment and ultimately panic. Economist Taimur Baig wrote in a report: "Inflation below 3% and policy rates above 5% are often difficult to coexist, so some monetary easing is necessary. But the amount of rate cuts priced in by the market seems excessive.

For the yield curve to reflect more than 200 basis points of rate cuts over the next 16 months, the U.S. economy must weaken significantly and inflation must fall below 2%, which is unlikely to happen." DBS Bank's base case is that the Fed will cut rates by 150 basis points by the end of 2025, with a 25 basis point cut this week.