Wells Fargo Forecasts Rate Cut By Fed Next Year

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Wells Fargo Forecasts Rate Cut By Fed Next Year

Wells Fargo Forecasts 225 bps Rate Cut By Fed Next Year

According to Wells Fargo, there's a high chance that the Federal Reserve will start to cut the interest rate starting in 2024. As for the exact month, they believe that it will start as early as March or May next year. Overall, around 225 bps rate cuts will be introduced by the Fed to lower the interest rate in the country.

The Wells Fargo analysts also added that the US economy remains strong. However, the growth remains subdued mainly due to poor manufacturing activity and the environment of high-interest rates.

Earlier, the experts at Wells Fargo were of the view that the rate cuts would start somewhere in May of 2024. But now, they have changed the month from May to March. In simple words, we may get the first-rate cut from the Fed in the month of March.

US Interest Rate In 2024 Will be 3% - 3.25%

Overall, around 225 basis points will be reduced from the policy rate and it will likely occur in intervals rather than doing it all at once. Throughout the process, the Fed will also continue to monitor inflation and other economic indicators to ensure everything is on point.

After the proposed rate cuts, the interest rate in the USA will move to the range of 3% to 3.25%. This will likely be achieved before the 2024's end.

Wells Fargo also added that the chances of a soft landing for the US economy have increased tremendously. That's why they also decided to revise their rate cut forecast as well.

The highlight of the Wells Fargo forecast was the tightening cycle of the Fed is almost coming to an end. In fact, the September 20th meeting will also likely lead to no rate hikes at all. As for the November meeting, the analysts at Wells Fargo believe that the rates will be kept on hold as well.

If this forecast from Wells Fargo turns out to be true, it will allow the equities market to perform well in 2024 as compared to the year 2023.

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