Fed to cut rates twice this year, starting September – Reuters poll

Summary:

The U.S. Federal Reserve is expected to implement two interest rate cuts this year, starting in September, according to a majority of forecasters in a recent Reuters poll. This consensus among economists contrasts with market expectations, which have fluctuated between predicting one or two cuts. The shift in market sentiment was influenced by recent data indicating slower economic growth in the last quarter, despite persistent inflation. Fed officials, however, have shown no urgency to cut rates, and some economists anticipate the upcoming “dot plot” projection to indicate fewer rate cuts than previously expected.

Nearly two-thirds of the economists surveyed predict the first rate cut to occur in September, reducing the fed funds rate to a range of 5.00%-5.25%. A smaller group of economists expect only one rate cut this year or none at all, with none foreseeing a cut in the upcoming June policy meeting. The decision to cut rates is seen as a calibrated approach rather than a significant shift in policy stance. Economists believe that as long as the economy remains stable and inflation trends downward, the Fed will proceed with easing rates. However, the ongoing high inflation and tight labor market suggest that achieving the Fed’s 2% inflation target may not happen until at least 2026, making early rate cuts less likely.

Our take (from the Straight to Smart newsletter):

Murky Jobs Data Reveals Fed’s Dilemma

Article Excerpt:

June 5 (Reuters) – The U.S. Federal Reserve will cut its key interest rate in September and once more this year, according to a majority of forecasters in a Reuters poll that also showed a significant risk they opt for only one or none at all.
Economists in Reuters surveys over the past few months have remained consistent in predicting two cuts, unlike markets which until last week were pricing in one, in November, before flipping back to two.

Click to read original Reuters article (subscription may be required):
Reuters poll – Fed to cut rates twice this year

Do you want expert help evaluating the best alternatives for you and your business?

Call us at (415) 510-2100 or use the chat box on this page to sent us a message. We’ll help you right away!

YOU MAY ALSO BE INTERESTED IN…

Interest Swaps or Rate Caps

Interest rates are in constant flux and having flexibility is critical to adapting and capitalizing on market changes. Whether you’re seeking to satisfy a mandatory hedging requirement from your lender, evaluating a refinancing opportunity or overseeing a portfolio of loans or bonds, every basis point has an economic impact, and we make sure your interests are protected.

To learn more about managing interest rate risk and what your best moves are please click here.

Click To Unmute

Defeasance Services

A successful defeasance, by releasing you from your mortgage obligation, unlocks your ability to take advantage of historically low rates. Derivative is an experienced Defeasance Consultant. We make certain all the intricate legal and financial details are fully completed and done on time. We specialize in making your defeasance stress and worry free.

To learn more about what defeasance is click here.

Check out our defeasance cost calculator.

Click To Unmute