Fed Will Not Change Rates At January Meeting

Fed Will Not Change Rates At January Meeting by Adam Rosen last updated on December 02, 2023

Fed Will Not Change Interest Rates At January Meeting - Barclays

According to Barclays analysts, the upcoming January meeting of the Federal Reserve will not lead to any change in the interest rate policy at all. Earlier, the Barclays experts were expecting the Fed to introduce a 25 bps rate hike during the first month of 2024.

In fact, Barclays believes that interest rates will remain unchanged (no rate hike or rate cuts) until we reach December 2024. In short, the market can forget about rate cuts even in the year 2024, according to Barclays.

No Rate Hikes In 2024

As for when the Fed officials will start to trim interest rates, Barclays believes that it will start by the end of 2024. The rate cuts will be split into 25 bps packages that will continue to lower the rates. By the end of 2025, the interest rate in the USA will be between 4 to 4.25%.

They added that the possibility of rate cuts in 2024 is essentially zero. But when it comes to rate hikes, there's always a chance that the economic data warrants a change. Especially if the Federal Reserve efforts fail to achieve disinflation, a few more rate hikes may happen in 2024.

In the last meeting, it was agreed by the Fed members that careful measures are needed to understand how the inflation & interest rate situation unfolds.

Several other prominent banks from Wall Street also believe that no rate hikes will likely occur in the next year. That's why Barclays also believes that when it comes to the interest rates in the USA, expect no major change throughout 2024.

The real question now is whether the current measures are enough for sustainable disinflation. Well, the CPI readings from the last few months suggest that it is a real possibility rather than a pipedream.

Once January's meeting of Fed officials is finished, it will become clear whether Barclays's forecast has any weight to it or not!