Insight Investment’s “reasonable base case” is two interest-rate cuts by the Fed by the end of 2024.
“However, we do not expect to see any activity until the summer, given our view that inflation will continue moderating [while remaining above-target] during the first half of the year.”
Insight sees risks around the outlook, as resilient inflation could justify a longer pause, or even a hike if inflation were to reaccelerate, while a recession may call for an earlier and faster pace of rate cuts.
ING said the Fed might cut interest rates by 150 basis points in 2024, starting in May, with a further 100bps following in early 2025.
“The Fed is seemingly buying into the argument that they can cut interest rates because falling inflation will push up real borrowing costs, but given our more cautious outlook for growth, we think the Fed will end up being more aggressive on rate cuts than both they and the market are currently expecting.”
Barclays Research has changed its expectations for interest-rate cuts by the Fed, now expecting three rate cuts of 25 basis points each, starting in June.
“We were surprised by the FOMC’s reluctance to push back against the notable easing of financial conditions over the past month or so.”