Updates throughout
May 13 (Reuters) - Wall Street brokerages have pared expectations for the Federal Reserve's interest rate cuts this year after the United States and China agreed to a temporary trade truce, with Goldman Sachs forecasting only one U.S. rate cut this year.
Washington and Beijing announced on Monday they would slash tariffs on each other for 90 days. The U.S. will cut tariffs imposed on Chinese imports to 30% from 145%, while China will cut duties on U.S. imports to 10% from 125%.
Traders, on average, now expect two U.S. rate cuts totaling 54 basis points by the end of 2025, compared with as many as four rate cuts expected last month, according to data compiled by LSEG.
Separately, consumer prices in the U.S. rebounded moderately in April, per data published on Tuesday, with headline inflation increasing 0.2% last month after dipping 0.1% in March. Economists polled by Reuters had forecast that the CPI would rise 0.3%.
Here are the forecasts from major brokerages after the Sino-U.S. trade deal:
Brokerage | Total cuts in 2025 | No. of cuts in 2025 | Fed Funds Rate |
Citigroup | 100 bps | 4 (starting in July) | 3.25-3.50% (end of 2025) |
J.P.Morgan | 25 bps | 1 (in December) | 4.00-4.25% (end of 2025) |
Goldman Sachs | 25 bps | 1 (in December) | 4.00-4.25% (end of 2025) |
HSBC | 75 bps | 3 (25 bps each in June, September and December) | 3.50-3.75% (end of 2025) |
Wells Fargo | 75 bps | 3 (25 bps each in June, September and December) | 3.50-3.75% (end of 2025) |
Barclays | 25 bps | 1 (in December) | 4.00-4.25% (end of 2025) |
ING | 50 bps | 2 (H2 2025) | 3.75-4.00% (end of 2025) |
Nomura | 25 bps | 1 (in December) | 4.00-4.25% (end of 2025) |
No rate cut | 0 | 4.25-4.50% (end of 2025) | |
Deutsche Bank | 25 bps | 1 (In December) | 4.00-4.25% (end of 2025) |
BofA Global Research | No rate cut | 0 | 4.25-4.50% (end of 2025) |
(Compiled by the Broker Research team in Bengaluru; Editing by Krishna Chandra Eluri and Devika Syamnath)
((Kanchana.Chakravarty@thomsonreuters.com;))