A significant majority of economists surveyed by Reuters now anticipate the U.S. Federal Reserve will initiate a series of interest rate reductions this year, commencing in September. This sentiment comes amid upward revisions in inflation forecasts for the second consecutive month.<\/p>\n
Despite Fed officials signaling a rate cut as the next course of action, persistent inflation concerns and escalating price expectations have cast some uncertainty over the timing and magnitude of such a move.<\/p>\n
While financial market indicators and economists alike foresee a negligible likelihood of rates remaining stagnant throughout the year, the prevailing view now leans towards the Fed exercising patience until September before implementing any adjustments.<\/p>\n
In the recent Reuters poll conducted in early May, nearly two-thirds of the economists surveyed projected the initial rate cut to occur in September, targeting a range of 5.00%-5.25%. This reflects a notable shift compared to the previous month’s survey, where only slightly over half of the respondents anticipated a September cut.<\/p>\n
One of our analysts highlighted the challenges posed by persistently elevated inflation figures throughout the first quarter, emphasizing the need for a clear change in trend before the Fed can comfortably initiate rate reductions. The analyst suggested that several months of positive data might be required to justify such action.<\/p>\n
Upcoming consumer price index (CPI) data for April will be a critical factor in shaping rate cut expectations, with any upside surprises potentially influencing the outlook towards fewer cuts.<\/p>\n
The personal consumption expenditures (PCE) price index, a key gauge for the Fed’s 2% inflation target, has also been trending higher recently, indicating that the hurdle for a rate cut remains substantial.<\/p>\n
Economists have broadly revised their inflation forecasts for 2024 upwards, signaling a persistent challenge in achieving the Fed’s target. However, it’s worth noting that some analysts acknowledge the possibility of the cutting cycle being delayed until November or even limited to a single cut in 2024.<\/p>\n
Approximately 60% of the economists surveyed anticipate two quarter-point cuts this year, representing a significant increase compared to the previous month’s findings. Nevertheless, the proportion expecting more than two reductions has dwindled, with a notable contingent predicting only one cut or none at all.<\/p>\n
The prevailing consensus among economists remains that the likelihood of the Fed maintaining current rates for the rest of the year is low.<\/p>\n
On the topic of the Fed’s neutral rate, the median estimate from respondents now stands at 3.00%-3.25%, indicating a higher range than previously assessed.<\/p>\n
The U.S. economy, despite growing at a slower-than-expected pace in the last quarter, is projected to expand by 2.4% this year, exceeding the Fed’s current estimate for non-inflationary growth.<\/p>\n","protected":false},"excerpt":{"rendered":"
A significant majority of economists surveyed by Reuters now anticipate the U.S. Federal Reserve will initiate a series of interest rate reductions this year, commencing in September. This sentiment comes amid upward revisions in inflation forecasts for the second consecutive month. Despite Fed officials signaling a rate cut as the next course of action, persistent…<\/p>\n","protected":false},"author":1,"featured_media":7976,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[681],"tags":[],"class_list":["post-7975","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-market-news"],"_links":{"self":[{"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/posts\/7975","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/comments?post=7975"}],"version-history":[{"count":1,"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/posts\/7975\/revisions"}],"predecessor-version":[{"id":7977,"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/posts\/7975\/revisions\/7977"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/media\/7976"}],"wp:attachment":[{"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/media?parent=7975"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/categories?post=7975"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/tags?post=7975"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}