BNP Paribas: Cut Fed Rate Expectations, 75 bps by Year-End

BNP Paribas has lowered its expectations for a US rate cut this year. The bank now believes the Fed will cut rates by 75 basis points by the end of December, in line with the market's pricing of 74 basis points and down from its previous forecast of 150 basis points. Camille de Courcel, the bank's head of European interest rate strategy, said: "Risks will be tilted more in favor of U.S. growth remaining strong and resilient, while it may take more time for Europe to really feel a rebound in growth. This will lead to the dollar being a bit stronger in the short term." The bank also sees upside risks to the dollar from the U.S. election, the prospect of continued U.S. economic growth, and the continued arbitrage attractiveness of the dollar if the Republican Party achieves a sweeping victory.