Economists: By the end of 2025, the U.S. unemployment rate may reach 4.4% or higher, and the rate cut may exceed market expectations

ChainCatcher news, economists at Pidgen Leigel Asset Management stated in a report on the economic outlook that as inflation declines and unemployment rises, the Federal Reserve's rate cuts in 2025 may exceed market expectations. They noted that the Fed's preferred core inflation measure could fall below 2% at some point in 2025, while the U.S. unemployment rate could reach 4.4% or higher by the end of 2025.

They also indicated that the Fed could "easily" lower rates by more than the current market expectation of a 35 basis point cut in 2025. The optimal level for the federal funds rate would be 3.3%, which implies at least four rate cuts in 2025.