Despite their hawkish stance, JPMorgan and Goldman Sachs continue to anticipate a rate cut by the US Federal Reserve.
The US Federal Reserve is still expected to drop key interest rates as early as July 2024, according to the largest global investment banking and brokerage firms JPMorgan and Goldman Sachs, despite the Fed’s aggressive policy stance and the US inflation rate being well below the two percent objective. CNN reports that there are substantial differences in opinions among market watchers regarding interest rates.
The study claims that major Wall Street firms’ predictions for the first rate cut are all over the place. Wells Fargo istiding that the first cut will come in September, but JPMorgan and Goldman Sachs anticipate it.
US Federal Reserve Policy Update: Possible Rate Hike in 2024, No Rate Cut Expected Until December
The first cut is not anticipated by Bank of America until December. Conversely, some Fed officials have even hinted that this year’s rate hike may occur rather than a decrease.
Later today, the US Federal Reserve will make public its third policy decision for 2024. In an ongoing effort to lower high inflation to its two percent objective, the US central bank increased its key lending rate to a 23-year high of between 5.25 to 5.50 percent. At this week’s meeting, Fed members will not be revising their quarterly economic estimates; therefore, any new advice will come from the policy statement itself and Fed Chair Powell’s press conference.
March economic and policy estimates from the US Fed
The Federal Open Market Committee (FOMC) stated that it anticipates three rate reductions in 2024 despite sticky inflation in its second policy for 2024, which was released on March 20. The policy rate will remain at its two-decade high, as agreed upon by the rate-setting panel, which added that it “does not believe that lowering the goal range will be acceptable until it has more assurance that inflation is steadily approaching two percent.”
FOMC Maintains Steady in the Face of Economic Strength: Interest Rate Forecasts and a Hawkish Attitude
By the end of 2024, FOMC members also agreed to maintain the median interest rate forecast at the halfway point between 4.50 and 4.75.. Accordingly, they continue to project reductions of 0.75 percentage points before year-end, or three reductions of 0.25 percentage points each. Since then, nevertheless, significant US macrodata, such as the GDP and inflation rates, have exceeded Wall Street forecasts. The US central bank will probably be forced by the economic data print to maintain its hawkish posture and hold off on raising interest rates until inflation falls below its predetermined objective.
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