Despite mixed comments from the Federal Reserve, Deutsche Bank said it continues to expect a rate cut in December, maintaining its long-standing view that the central bank will implement a 25-basis-point cut before taking a long pause.

In its latest "DB Fed Watcher" research note, Deutsche Bank analysts stated that their baseline scenario remains "a 25-basis-point rate cut in December, then a pause until the third quarter of 2026."

The bank added that it expects "another 25-basis-point cut in September," which would be implemented under the Fed's new guidance, implying a final rate of 3.375%.

This forecast comes despite Fed officials expressing a wide range of opinions before the silence period. Deutsche Bank emphasized that "regional voting members generally leaned against a rate cut in December," while senior officials were more open to further policy easing.

Some policymakers signaled caution about cutting rates too quickly, with several arguing that inflation "shows no sustained signs of returning to 2% anytime soon" and warning that additional easing could "increase the risk of higher inflation."

Others, however, pointed to labor market weakness and argued that the December decision could serve as a hedge.

Nevertheless, Deutsche Bank emphasized that the broader debate does not change its forecast: one cut in December, followed by a lengthy pause.

The bank stated that it sees rates "unchanged until the third quarter of 2026," reflecting the view that the Fed will tread carefully, balancing inflation risks with signs of cooling demand.