FX168 Financial News (Asia-Pacific) reported that Benjamin Picton, Senior Macro Strategist at Rabobank, indicated that there is evidence suggesting that progress in reducing price pressures may be stagnating. The bank's outlook states that the Federal Reserve will only cut interest rates two more times, ending the easing cycle after January 2025. He noted that even market doves have started to show some signs of loosening.

Picton mentioned that the US November Consumer Price Index (CPI) inflation report is mild enough to alleviate concerns about whether the Federal Reserve will cut rates at its policy meeting next week. In light of the report meeting expectations, the Nasdaq has responsibly risen.

Nevertheless, Picton emphasized that there is evidence suggesting that progress in reducing price pressures may be stagnating.

He explained that the overall CPI inflation rate is 2.7%, slightly above October's 2.6%, while core inflation remains "sticky" at 3.3%. Therefore, there are still concerns in the market about whether the FOMC meeting on December 18 will lead to a "hawkish rate cut."

Rabobank believes that the Federal Reserve may only cut rates twice more - next week and in January, after which its easing cycle will end.

(Source: Twitter)

Picton stated, "Even market doves are debating whether the Federal Reserve must at least pause its easing cycle in early 2025 in light of the recovery of the US economy and the inflation support policies of elected President Trump."

Contrary to the outlook of the Federal Reserve, the market tends to expect that most other G10 central banks, except for the Bank of Japan, will accelerate the pace of interest rate cuts.

The Bank of Canada significantly cut rates by 50 basis points, and the market has priced in about 80% of this expectation. The central bank referred to the recent surge in Canada's unemployment rate as a reason, but most of the justification for this move is the slowdown in Gross Domestic Product (GDP) growth.

Despite the softening of monetary conditions, Trump's threat to impose a 25% tariff on Canada and Mexico still casts a shadow over the economic outlook. Canadian Prime Minister Trudeau initially took a conciliatory approach, promising to increase investments in border control to alleviate Trump's concerns about illegal immigration and smuggling.

However, Ontario Premier Ford stated this week that the province is prepared to cut off electrical utilities exports to the USA in response to Trump's tariff threats. He also mentioned that Ontario is compiling a list of potential retaliatory measures. Reports indicate that the province exported about 13% of Canada's total electrical utilities exports to the USA last year.

During this week's talks among NATO European member states, Trump's influence was clearly visible. The Financial Times reported that discussions are underway to increase defense spending from 2% to 3% of GDP, although NATO expects that only 23 of the 32 member countries will meet this lower target this year. Trump has called for Europe to pay more for defense, and the long-standing issue of inadequate investment in defense has become more evident given the situation between Russia and Ukraine. That said, many European countries' budgets are already under pressure.

Reports indicate that in Syria, the rebel group HTS is rapidly consolidating its power. There is widespread concern about whether the organization's leadership is inclusive. While there are many signs that some Syrian refugees have begun to return home, there are also reports that members of the same Islamic sect, including the Assad family, have crossed into Lebanon to avoid retaliation.