ING Analysts Predict Three Interest Rate Cuts in 2024, Exceeding Fed's Projections
ING analysts have issued a warning that a combination of weakening economic data and a softening jobs market could prompt the Federal Reserve to cut interest rates three times in 2024. This forecast goes beyond both the Fed's own projections and market expectations.
According to ING, the recent decline in the ISM services index, along with an increase in jobless claims, indicates a possible interest rate cut in September. The firm believes that while the Fed is signaling only one cut this year, the consensus and market are anticipating two, with the potential for three cuts on the horizon.
The latest data, particularly the "truly dismal" ISM services index for June, paints a worrisome picture of a slowing economy. ING points out that this drop to a four-year low is worse than any individual forecast submitted to Bloomberg since the height of the pandemic.
These indicators are seen as reliable predictors of changes in the economic cycle, suggesting increased risks of downside growth. Combined with decelerating inflation, ING believes that a September rate cut is becoming more likely as the Fed aims to prevent a recession.
In conclusion, investors should pay close attention to these developments as they could have a significant impact on financial markets and the overall economy. A series of interest rate cuts by the Federal Reserve could lead to changes in borrowing costs, investment strategies, and consumer spending habits. It is crucial to stay informed and adapt investment portfolios accordingly to navigate potential market shifts effectively.