(Reuters) – Three major brokerages expect the U.S. Federal Reserve to lower interest rates in June, months later than what markets were predicting earlier this year, as sticky inflation fanned concerns of cutting rates too soon.
Fed minutes of the Jan. 30-31 session published on Wednesday signaled broad uncertainty among the policymakers about how long borrowing costs should remain at their current range of 5.25%-5.50% to bring inflation to the central bank’s 2% target.
Data from the Labor Department showed last week that U.S. consumer prices rose more than expected in January, though the annual increase has moderated from a peak of 9.1% in June 2022.
A slim majority of economists polled by Reuters expect the Fed to cut the federal funds rate in June, in line with market expectations showing a near 53% chance of a cut in the month, according to CME’s FedWatch tool. [ECILT/US]
Following are forecasts from some major brokerages on when they expect the first cut and the magnitude of expected cuts this year:
Brokerages First cut expected Quantum of cuts Federal funds
in cycle expected in target rate
2024 (basis (Dec ’24)
points)
Goldman June (25 bps) 100 bps 4.25%-4.50%
Sachs
UBS Global June (25 bps) 75 bps 4.50%-4.75%
Wealth
Management
Morgan June (25 bps) 100 bps 4.375%
Stanley
(Compiled by the Broker Research team in Bengaluru; Editing by Devika Syamnath)
