WASHINGTON–Predictions of three rate cuts by the Federal Reserve in 2024 that have been considered a lock among analysts and economists aren’t looking so lock-tight anymore.
Especially on Wall Street, many don’t believe the Fed will ultimately deliver a trio of rate reductions this year, with some now saying they believe there will be no rate cuts at all, according to the Wall Street Journal.
Economists in credit unions have also forecast the Fed will move to cut rates this year, most likely beginning in June. The current Fed Funds target rate is between 5.25% and 5.50%.
Jobs Numbers Complicate Things
But ongoing blockbuster jobs numbers and stubborn inflation have clouded the crystal balls of many as the economy has not cooled in ways many had thought it would.
“The shift could pose a challenge to a stock-market rally built on the hope that the economy would slow enough for the Fed to lower borrowing costs from multidecade highs above 5%, but not enough to start a recession,” the Journal said in its analysis.
What They’re Saying
Among those offering their updated views to the Journal:
- “The last of the economic bears are throwing in the towel. We have a sustained economic expansion, and investors who manage risk are now repricing it.” -- Joe Brusuelas, chief economist at RSM US
- “The Fed can still cut in June and couch it as fine-tuning rather than a dramatic change in the stance of monetary policy. But they don’t have to be in a hurry.” --Brian Jacobsen, chief economist at Annex Wealth Management.
- Minneapolis Fed President Neel Kashkari said last week that the central bank would hold off on cutting rates if inflation doesn’t subside. Dallas Fed President Lorie Logan said she was concerned that inflation declines might stall and warned that it was “much too soon to think about cutting interest rates.”
New Consumer Price Index (CPI) data is scheduled to be released on Wednesday.
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