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While the entire financial world was wondering whether the US Federal Reserve (Fed) would start reducing interest rates in September, the reports of market experts from the famous news agency Reuters were received. According to the survey, the general opinion is that the reduction will be 50 basis points in total, from 25 basis points each, in September and December in 2024.
Reuters’ Fed Rate Survey Reading
The Fed, which started to increase interest rates due to seriously overheating inflation in March 2022, maintained the period of more than 2 letters and started discounts, despite the huge demands of the market. They had predicted 6 to 8 interest rate cuts at the beginning of 2024, but in the face of inflation not falling, they sometimes reduced this number to 2 and sometimes to 0.
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According to the latest survey of economists by Reuters, one of the world’s largest news agencies, the number of interest rate cuts expected in the second half of 2024 stands out as 2.
The release of pressure on prices, a weakening of the labor force, and a decline in inflation to 3% offer FOMC members “more confidence” in interest rate cuts. In fact, expectations were for an interest rate cut to come in May, or between November or December at the earliest, but the rapid decline in CPI gave the green light for September.
The majority of economists surveyed by Reuters stated that they expected two interest rate cuts this year. All 100 economists who participated in the survey stated that they did not expect a reduction (or increase) from the interest rate decision on July 31. The 82 survey expects a 25 basis point interest rate cut in September. 15 people stated that they are saving the earliest interest rate cut for November or December. A very small group of 3 people do not expect the Fed to cut interest rates this year.
What Do Experts Think About the Fed Interest Rate Cut?
Jonathan Pingle, chief economist of the US branch of UBS bank, said that he expected interest rate cuts in both September and December and that it was working:
“Unless there is an expected increase in inflation figures, we expect two interest rate cuts of 25 basis points each, in September and December. “If more interest rate cuts come, this will require data from a labor market that is as bad as expected.” It was noted that the rate of two interest rate cuts, which was seen as 60% in the Reuters survey in June, was 75% in this survey. PCE, or personal consumption expenditures data, to be announced on Friday, will also give an important idea about the course of inflation.
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