TL;DR
- Deutsche Bank projects a 25 basis point cut by the Federal Reserve in December.
- The Polymarket platform shows the probability of this cut has sharply risen to 84%.
- The bank expects the Fed to keep rates unchanged throughout 2025 and into 2026, despite the initial cut.
Deutsche Bank is joining the growing wave of market forecasts leaning towards a Fed rate cut in December 2025. The bank’s analysts expect the Federal Reserve to implement a 25-basis-point reduction at its next meeting at the end of the year.
This prediction not only validates speculation in traditional markets but also finds strong support in the crypto segment. For its part, Polymarket shows that the odds for this same outcome have surged to an impressive 84%, reflecting a rapid and strong consensus among traders and macroeconomic bettors for an imminent shift in monetary policy.
Deutsche Bank presents a nuanced and cautious view when outlining its outlook. Its economists expect the December Fed rate cut to be followed by a long pause. They project that the Fed will keep policy unchanged for the remainder of 2025 and until the third quarter of 2026.
This roadmap suggests that the bank anticipates a gradual deceleration of inflation, without a sharp recession, which would allow the Fed to move slowly. This caution contrasts with market pricing, which often points to a faster cutting cycle in the event of deeper economic weakness. The bank prioritizes that the Fed will wait for clearer evidence before offering any additional relief after its initial move.
Polymarket’s Support Confirms the Shift in Sentiment
Polymarket’s data reinforces the shift in sentiment. The “25 bps decrease” contract has seen an intraday jump of 13%, reaching an 84% probability, while the possibility of “no change” plummeted to 16%.
This is a notably rapid change that indicates how the influx of new macroeconomic data and forecasts has influenced expectations for the December 10 FOMC meeting. With bets on larger moves (50+ basis points) and rate hikes remaining minimal, attention is focused solely on the magnitude and timing of the first cut.
The alignment between Deutsche Bank’s institutional analysis and the collective wisdom of the prediction market regarding the December Fed rate cut suggests that this event has become the most likely baseline scenario for the end of the year.
