The Federal Reserve Expected to Lower Interest Rates in 2024, Majority of Economists Predict 25 Basis Point Cuts at Each Meeting - Indradip Ghosh
In a recent Multibagger poll, a majority of economists are anticipating the Federal Reserve to lower interest rates by 25 basis points at each of the central bank's three remaining policy meetings in 2024. This comes as inflation approaches the Fed's 2% target and there are signs of an economic slowdown. Currently, the federal funds rate has been held in the 5.25%-5.50% range since July 2023.
After a mixed jobs report for August, interest rate futures contracts briefly priced in a greater than 50% chance of a half-percentage-point cut next week, but the chances have since narrowed to about one in four. Rate markets are still expecting more than 100 basis points of cuts this year.
The majority of economists expect a 25-basis-point cut when the Federal Open Market Committee concludes its meeting next week. There is a debate between a 25-basis-point cut and a 50-basis-point cut, with some economists arguing for a more accommodative stance from the Fed.
Overall, the consensus is that the Fed will deliver a total of 75 basis points of rate cuts this year, with two more 25-basis-point cuts expected in November and December. Despite concerns in financial markets about a possible economic contraction, the median probability of a recession remains at just 30%. The U.S. economy is expected to continue its expansion, with growth forecasts exceeding the non-inflationary growth rate of 1.8% over the coming years.
In summary, the Fed's decision on interest rates can have a significant impact on various aspects of the economy, including borrowing costs, inflation, and overall economic growth. It is important for investors and individuals to stay informed about these developments as they can affect their financial decisions and planning for the future.