MADISON, Wis. – NAFCU economist Dr. Tun Wai is among those predicting the Federal Reserve Board will announce a rate cut when it concludes a two-day meeting today.
According to NAFCU's Macro Data Flash on the Consumer Price Index, released today, Wai said the CPI experienced the biggest one-month decline in 61 years in November, with rapidly falling energy and gas prices primarily to blame.
"If inflation continues to slow, there is a real possibility that the 12-month change in prices could become negative (deflation). To avoid deflation, the Federal Reserve will have to react with strong monetary policy," Wai said.
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"For that reason, NAFCU is expecting further cuts in rates in December in order to lower the downside risk to growth. Although this should encourage credit union members to borrow more, job losses and low income may deter growth in the near term."
The Wall Street Journal predicted the Fed will lower its overnight lending rate by one-half of percent, to 0.5%.
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