The Fed is done, says RBC Capital:

"Global central bank divergence is one of our key themes for 2025 and the shift in the Fed dots and language from its Dec meeting with the hawkish tilt confirmed in last week’s minutes coupled with the strength of Dec services ISM and NFPs has tipped our US colleagues into removing their last 25bp cut from their profile for the upcoming Jan meeting. 

"We think the Fed is done with terminal at the current 4.25-4.50%. 

"Markets have had little priced for Jan for some time and continue to pare back their expectations for further easing over the course of 2025. 

"Nevertheless, we remain above consensus and the market which is still clinging to a final 25bp move. 

"As highlighted in our US 2025 Outlook, the risk is for the Fed to adopt a tightening bias later in 2025."

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