The Federal Reserve likely to signal larger interest rate cuts in the future, says Citi analysts
The Federal Reserve is expected to cut rates for the first time since March 2020, bringing rates down from 5.25% to 5.5%
There's uncertainty over the size of the potential cut, with a 65% chance of a 50-basis point cut according to CME Group's FedWatch Tool
Reports suggest a jumbo cut is still a possibility, with former NY Fed President Bill Dudley advocating for a deeper cut
US retail sales rose unexpectedly in August, adding to the complexity for Fed officials
The Fed's announcement will also include an update on rate projections, an official statement, and a press conference with Chair Jerome Powell
Traders are looking for insight on the Fed's approach to easing, with expectations of at least 100-basis points in cuts by 2024
Citi analysts expect a dovish meeting with Powell hinting at larger cuts in the future
Despite stronger retail sales figures, concerns about a developing economic slowdown remain
Analysis:
The Federal Reserve is expected to announce a rate cut, with indications pointing towards larger cuts in the future. This decision can impact borrowing costs and economic activity. Traders are closely watching for insights on the Fed's easing cycle approach, with expectations of significant cuts by 2024. Despite positive retail sales figures, concerns about an economic slowdown persist. Investors should stay informed and monitor the Fed's announcements for potential market implications.