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Federal Reserve releases interest rate projections for only two cuts in 2025. NASDAQ, Dow Jones reel on news with equities shedding weight. US Dollar surges on thought of higher rates for longer. MSFT stock looks likely to continue pulling back toward $410.   Microsoft (MSFT) stock crashed along with the general market on Wednesday as the Federal Reserve’s (Fed) more hawkish view of 2025 interest rates made Wall Street rethink the post-election run-up. MSFT stock closed 3.76% lower to $437.39, worse than the Dow Jones Industrial Average (DJIA)’s -2.58% performance or the NASDAQ’s -3.56% outing. Microsoft stock news: Fed only sees two cuts next year Just like everyone expected, Jerome Powell’s Fed cut interest rates by 25 basis points on Wednesday. That wasn’t what the market cared about though. The Fed produces a Summary of Economic Projections (SEP) each quarter, and the latest version arrived on Wednesday. The SEP includes the so-called “dot plot” —  a projection of where each voting member on the Federal Open Market Committee (FOMC) expects interest rates to be in the future. The newest dot plot tells us that the central bank is now expecting a much slower rate cutting cycle than it did before. One year from now, the dot plot shows interest rates at 3.9% rather than the 3.4% predicted in September. Two years from now, the Fed is expected to have interest rates at 3.4% rather than 2.9%. This means that the central bank is expected by the very board who will be voting on rate changes in the future to only introduce two 25 bps cuts in 2025. Then the Fed is expected to do the same in 2026. The more hawkish posture comes as the market is worried by recent inflation reports that show prices failing to push much below…

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Filed under: News - @ December 19, 2024 7:20 am