Will the FED Reduce Interest Rates in 2024? Expert Analysts Weigh In!
At the most recent monetary policy meeting in 2023, the FED hinted at the possibility of three interest rate cuts in the following year. However, market expectations, as indicated by the CME FedWatch Tool, suggest that around 200 basis points of easing could be implemented in 2024, potentially beginning as early as March.
As we approach the new year, many analysts and financial institutions are aligning their forecasts with market expectations rather than adhering strictly to the FED’s own projections. Nonetheless, the majority of experts believe that March might be too early to initiate a new easing cycle, with some suggesting it would convey an unwanted message of an impending recession.
While the market anticipates significant interest rate cuts by the FED in the coming year, it also foresees relative stability in economic activities. This divergence in outlook was emphasized by Sameer Samana, senior global market strategist at Wells Fargo, who noted the potential for either a continuation of the soft landing leading to inflationary concerns, or a more severe economic slowdown resulting in a much harder landing.
TD Securities analysts predict that the Federal Reserve will gradually reduce interest rates by 250 basis points throughout the year, with the first cut likely to occur in May. Similarly, Commerzbank analysts anticipate a 200 basis point reduction in interest rates next year, with the initial cut also expected in May.
It is important to note that the information provided here should not be interpreted as investment advice.