These banks expect Fed to start cutting interest rates in June

FedWatch data revealed that a narrow majority of economists polled by Reuters expect the US Federal Reserve to cut the federal funds rate in June, in line with market expectations that show a roughly 53% probability of a cut in the same month, as both Goldman Sachs and Goldman Sachs expect. UBS Global Wealth Management and Morgan Stanley began their interest rate cuts in June.

The Federal Reserve’s minutes for the January 30-31 session, published last Wednesday, indicated widespread uncertainty among policymakers about how long borrowing costs must remain at their current range of 5.25%-5.50% to bring inflation to the central bank’s target of 2%.

According to Al Arabiya, data from the Department of Labor showed last week that consumer prices in the United States rose more than expected in January, although the annual increase declined from a peak of 9.1% in June 2022.

Goldman Sachs expects an overall reduction of 100 basis points over the course of the year, leading to a target rate of 4.25% to 4.50% by December 2024.

Goldman Sachs said: “Given that there are only two rounds of inflation data and just over two months until the May (Federal Reserve) meeting, his comments indicate to us that a rate cut as early as May, which we had previously expected, is unlikely.” Analysts also forecast in a note a further cut next year instead, with the final interest rate expected to remain unchanged at 3.25-3.5%.

UBS Global Wealth Management also expects an initial cut in June but expects a more conservative overall cut of 75 basis points, ending the year at a rate of between 4.50% and 4.75%.

Morgan Stanley’s forecasts are in line with those of Goldman Sachs, which expects a decline of 100 basis points by the end of the year. The consensus among these institutions points to industry expectations of a significant easing of monetary policy by the Federal Reserve.