Deutsche Bank now joins markets in leaning toward a December interest-rate cut, calling for a 25-basis-point move from the Federal Reserve. At the same time, prediction platform Polymarket shows odds for that outcome surging to 84 percent, while alternative scenarios fade.
Deutsche Bank Sees December Fed Cut, Then Long Pause Until 2026
Deutsche Bank analysts now expect the Federal Reserve to cut interest rates by 25 basis points at its December meeting and then keep policy unchanged for an extended period. In their latest forecast, they see the central bank holding rates steady through 2025 and into 2026 as officials watch how the economy absorbs earlier tightening.
At the same time, the bank’s economists project that the Fed will not move again until the third quarter of 2026. They anticipate another 25 basis point cut around that time, which would gently lower borrowing costs while keeping policy in restrictive territory. This path suggests that Deutsche Bank expects inflation to ease without a sharp downturn, allowing the Fed to move slowly rather than launch a rapid cutting cycle.
The call contrasts with market pricing that leans toward a series of rate cuts starting sooner if growth weakens or inflation falls faster than expected. However, Deutsche Bank’s baseline assumes that the Fed will stay cautious, prioritizing its inflation target and waiting for clearer evidence before delivering any additional relief after December.
Polymarket Odds Show Sharp Jump in December Rate-Cut Expectations
Meanwhile, Polymarket data shows a clear surge in expectations for a 25-basis-point Federal Reserve rate cut in December. The “25 bps decrease” contract now stands at 84 percent, reflecting a strong intraday jump of 13 percentage points from earlier levels. This move signals a rapid shift in positioning as traders price in a higher likelihood of easing at the upcoming FOMC meeting.
Fed December Rate Cut Odds. Source: Polymarket
At the same time, the probability of “no change” fell to 16 percent, dropping 12 percentage points. The sharp decline shows how quickly sentiment flipped in favor of a cut. Meanwhile, bets on a larger move remain minimal: the “50+ bps decrease” contract holds near 1 percent, and expectations for a rate hike sit below 1 percent.
The chart underscores this repricing. The orange line, representing the 25 bps cut probability, climbed steeply through the session, while the blue line for “no change” pulled back. This shift aligns with broader macro positioning as markets respond to incoming data and updated forecasts for the December 10 meeting.
