Fed To Start Rate Cuts From September

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Fed To Start Rate Cuts From September

Fed To Start Rate Cuts From September, According To Analyst

The question that is on everyone's mind is when the Federal Reserve will start its rate-cut campaign in 2024. At first, it was March, which moved on to June or July meetings. However, one analysts believe that the first rate cut of 2024 will happen at the September meeting.

With the latest data on inflation and GDP, the policymakers of the Fed have little urgency to lower the policy rate in the country. However, this doesn't mean that we can totally discount the chances of a rate cut this year... At worst, the rate cut could be delayed to the latter half of 2024, but it is coming nonetheless.

Inflation Touched 2.7% In March

While the inflation rate was higher than the Fed's and the market's forecasts, it was still in line with various other economists. In fact, some of the Fed members also talked about the possibility of a resurgence in inflation.

Core PCE, which is also known as the Fed's favorite gauge for inflation, moved from 2.5% to 2.7% while the Fed's target is 2%. So in a sense, we can say that the inflation actually moved away from the Fed's target rather than move towards it.

After the release of inflation data, one analyst highlighted that it hints at the fear of a resurgence in inflation. As a result, the most likely outcome of the inflation data is a delay in the rate cut or even an end to the rate cuts (least likely.)

For now, the chances of the first-rate cut at the September meeting are now hovering at 60%, a little higher after the release of the report. As for the timing of the 2nd rate cut in 2024, there's still a 50% chance that it will happen.

The bottom line is that the PCE report has once again delayed the rate cut from the Fed, which was expected to happen at the June or July meeting.

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