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When will the Fed start cutting?

When will the Fed start cutting?

Important points:

  • Analysts are already beginning to anticipate when the Federal Reserve will decide to cut interest rates.
  • An economist at Goldman Sachs believes the Fed will start cutting interest rates in the first six months of 2024, rather than this year.
  • In addition, you expect inflation to be only 3% per year, averaging next year.

Investors are well aware of what is going on with interest ratesbecause they usually drive their cars or go to the markets.

In this sense, an economist at Goldman Sachs stated that the Federal Reserve will start cutting interest rates during the first six months of the next year.

This is David Marsicle, who also pointed out that it is very likely that interest rates will go up hold high For some time, while the fight against inflation continues.

“Our baseline outlook calls for cuts to begin in the second quarter of 2024, proceed at 25 basis points per quarter, and end at 3-3.25%. But we don’t see much need for a cut and as a result we think there is a significant risk that the FOMC will remain flat. “.

marsicle.

It should be remembered that the federal funds rate is in a target range between 5% and 5.25%the highest number in more than 22 years.

The expert stated that inflation is closer to the Fed’s target of 2% annually to 9% than it was last year. In addition, he noted that it is possible to see A moderate recession And not as strong a contraction as was expected some time ago.

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Goldman Sachs expects core personal consumption prices to fall below 3% annually by mid-2024.

What do the markets think about interest rates?

according to CME Group AccountsMarkets allocate a 80% probability To cut the interest rate for the first time by 25 basis points in May 2024. In addition, they expect the rate to reach 4.6% by the end of next year.