Although Federal Reserve officials have agreed to cut interest rates in December and hinted that further easing may be possible in the future, this has not prompted traders to sharply raise their expectations for lower borrowing costs. The market still tends to bet that interest rates will be cut twice next year, rather than the three expected in early December. While policymakers have emphasized concerns about labor market risks, traders are likely to wait for subsequent data to validate these concerns.

Although Federal Reserve officials have agreed to cut interest rates in December and hinted that further easing may be possible in the future, this has not prompted traders to sharply raise their expectations for lower borrowing costs. The market still tends to bet that interest rates will be cut twice next year, rather than the three expected in early December. While policymakers have emphasized concerns about labor market risks, traders are likely to wait for subsequent data to validate these concerns.