Generali economists: The market has overestimated expectations of further Fed easing; another rate cut in January next year would be reasonable.

Paolo Zanghieri, senior economist at Generali Investments, said he and his team believe the market has already priced in a larger rate cut than the Federal Reserve is likely to implement. “We see a 50% chance of a rate cut next month. Given the limited new data, it’s reasonable for the Fed to wait until January to cut rates, while simultaneously signaling a dovish bias. More importantly, the market’s expectation of nearly four rate cuts next year, based on hopes for a rapid decline in inflation, seems overly optimistic. We expect only a 50 basis point cut by the summer.” (Jinshi)