America's better-than-expected service sector data gave traders the green light to postpone the expected US Federal Reserve interest rate cut until the second half of 2025. Before the data was released on Tuesday, traders preferred the Federal Reserve to cut interest rates by 25 basis points until the June meeting. However, as my colleague Simon White pointed out, the signs of growth and inflation in the data indicate that the US economy is accelerating. Looking at it now, as a result, interest rate cuts may become a theme in the second half of this year. However, if there are more signs — particularly the non-farm payrolls report released on Friday — that the economy is strong, then it is likely that the idea of cutting interest rates even once this year will become more far-fetched.

America's better-than-expected service sector data gave traders the green light to postpone the expected US Federal Reserve interest rate cut until the second half of 2025. Before the data was released on Tuesday, traders preferred the Federal Reserve to cut interest rates by 25 basis points until the June meeting. However, as my colleague Simon White pointed out, the signs of growth and inflation in the data indicate that the US economy is accelerating. Looking at it now, as a result, interest rate cuts may become a theme in the second half of this year. However, if there are more signs — particularly the non-farm payrolls report released on Friday — that the economy is strong, then it is likely that the idea of cutting interest rates even once this year will become more far-fetched.