Forbes: A 25 basis point rate cut has become a market consensus. The key lies in the signal the Fed sends for next year's monetary policy.

economists and financial market insiders suggest that the Federal Reserve is highly likely to announce a 25 basis point rate cut on the 19th, but what may be more noteworthy is the signal the Fed sends regarding its monetary policy goals for 2025.

Currently, economists from the three major investment banks in the US - Bank of America, Goldman Sachs, and JPMorgan - predict that the Fed will cut interest rates by 25 basis points from 4.5%-4.75% to 4.25%-4.5%. This will bring the rates to the lowest level since February 2023, dropping a full percentage point from the range of 5.25%-5.5% in July-September 2023.

However, despite the market's consensus on this, the Fed will also release quarterly economic forecasts, including each central bank governor's expectation for interest rates in 2025. Economists from Bank of America, Goldman Sachs, and JPMorgan predict that the median forecast will be reduced from the previous prediction of four 25 basis point rate cuts next year to three, with a target range of 3.5%-3.75% by the end of 2025. Regardless, it is clear that Americans will need to adapt to higher rates for a longer period of time, with rates likely to stay above 3% for an extended period, a threshold that has not been reached between 2009 and 2021.