Economists Predict Aggressive FED Rate Cuts by End of 2024

• The Federal Reserve’s anticipated interest rate cuts for 2024 are becoming clearer among economists.
• A recent survey reveals economists’ predictions about the Fed’s interest rate reduction plans.
• Key insights include expectations of a three-quarter-point reduction by the end of 2024.

Discover how economists’ projections of Federal Reserve’s rate cuts might influence financial markets in 2024.

FED’s Potential Rate Cuts: Economist Predictions Signal Significant Changes

A survey conducted by Reuters indicates that economists expect the Federal Reserve to implement a cumulative three-quarter point cut in rates before the end of 2024. This outlook is perceived as more aggressive compared to previous forecasts, with many economists predicting three separate 25 basis point cuts at the remaining meetings this year.

Pivotal Market Movements and Interest Rate Adjustments

The softer-than-expected July employment report has significantly influenced these predictions. Initially, the forward rate agreement market anticipated a total reduction of 120 basis points throughout 2024, but now the expectation has been adjusted to 100 basis points. Additionally, unexpected movements in foreign exchange markets, such as a sharp rise in the Japanese yen, have contributed to the shifting forecast towards a more aggressive stance on rate cuts.

Economic Insights: Evaluating Federal Reserve’s Rate Cut Calculations

Recent robust retail sales data suggests that the U.S. economy maintains its strength, implying that the Federal Reserve might not rush into a rapid series of rate reductions. According to the survey, 54% of economists predict that the Fed will opt for 25 basis point cuts in September, November, and December. Should these forecasts hold, the federal interest rate could lower to a range between 4.50% and 4.75% by year-end.

Powell’s Upcoming Speech: Anticipation in Traditional and Crypto Markets

Investors in both traditional finance and cryptocurrency markets are keenly awaiting the speech by Federal Reserve Chairman Jerome Powell on August 23. Analysts from Evercore ISI speculate that Powell might address the potential for a 50 basis point reduction during his remarks. It is anticipated that Powell will reiterate the Federal Reserve’s commitment to its inflation targets and may provide indications that the initial rate cut could commence as soon as September.

Conclusion

As the Federal Reserve’s interest rate strategy for 2024 becomes clearer, market participants are attentively monitoring economic data and official communications for insights. The evolving predictions around rate cuts underscore the uncertainties that define the current economic landscape. Investors are advised to stay informed to navigate the potential impacts on both traditional and emerging financial assets effectively.