Fed Will Cut Interest Rates — But When? Most Investors Agree It Won't Be July, Bank Of America Says

Zinger Key Points
  • The next Federal Open Market Committee meeting is July 30-31.
  • The median forecast of all 19 U.S. central bankers was for a single interest rate cut this year.

According to Bank of America‘s monthly global fund manager survey, investors are confident the Federal Reserve will lower interest rates at least twice in the next year.

What Happened: Here’s a breakdown of the findings, per Barron’s:

  • 84% of investors anticipate a rate cut sometime in 2024.
  • 33% of respondents foresee two rate cuts in the coming year.
  • 31% predict three cuts.
  • 14% expect more than three reductions.
  • 8% believe the Fed will maintain current rates throughout the period.
  • 39% of investors predict a rate cut in September.
  • 16% expect a cut in November.
  • 23% foresee a cut in December.
  • 6% believe a rate cut will occur as early as July.

See Also: May Retail Sales Fall Short, Suggest Weakening Consumer

Why It Matters: The Federal Reserve’s interest rate decisions significantly impact the economy, borrowing costs, interest rates and the stock market.

The Fed has maintained its benchmark policy rate in the 5.25%-5.5% range since July 2023 to counter inflationary pressures.

Its projections, released earlier this month, indicate the median forecast of all 19 U.S. central bankers was for a single interest rate cut this year.

When? Neel Kashkari, the President of the Minneapolis Federal Reserve, says “toward the end of the year.”

What’s Next: The next Federal Open Market Committee meeting will be held July 30-31.

At last month’s FOMC meeting, Fed Chair Jerome Powell pushed back on fears of rate hikes, deeming them as “unlikely.”

Price Action: The SPDR S&P 500 ETF Trust SPY was up 0.075% at last check Tuesday, while bonds, as gauged by the iShares 20+ Year Treasury Bond ETF TLT were 0.52% higher.

Now Read: Wall Street Looks Jaded After Record Run As Traders Shift Focus To Retail Sales Data, Fed Speeches: ‘FOMO Still Rules The Market For AI-Related Stocks,’ Says Analyst

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