Traders trim bets for Dec rate cut as Fed chief signals caution

US economic resilience gives officials room to lower rates at more careful pace: Powell

WASHINGTON - Traders pared back their expectations for an interest rate cut in December after US Federal Reserve chairman Jerome Powell said economic resilience gives officials room to ease more carefully.

Swaps traders lowered the chance to less than 60 per cent that the central bank reduces rates at its two-day gathering that wraps on Dec 18 - from roughly 80 per cent a day earlier.

Mr Powell said the recent performance of the US economy has been "remarkably good", giving the Fed room to lower interest rates at a careful pace.

He said the US economy was not sending signals that policymakers need to be in a hurry to lower rates, though he made no comments on the possibility of a cut at the December meeting.

"Going a little slower - if the data lets us go a little slower - seems like a smart thing to do," Mr Powell said during the question and answer portion of the event.

Traders have been recalibrating their bets for the Fed's next rate reduction in recent days, boosting the chances of a December move after US October consumer inflation data came in and was in line with expectations.

While the swaps market still favors a December reduction for now, the outlook gets murkier for 2025.