- The Federal Reserve’s recent decision to maintain interest rates has prompted major banks to speculate on the timing of the first rate cut.
- Several prominent U.S. banks have revised their interest rate forecasts following the Fed’s decision.
- Bank of America predicts the first rate cut will occur in December 2024, with a total reduction of 25 basis points (BPS) throughout the year.
Discover the latest predictions from major banks on the Federal Reserve’s interest rate cuts and their potential impact on the financial market.
Bank of America and Other Major Banks’ Predictions
Bank of America forecasts that the Federal Reserve will initiate its first interest rate cut in December 2024, with a total reduction of 25 basis points over the year. Barclays and BNP Paribas share similar views, predicting the first cut in September and December 2024, respectively, with a 25 basis point reduction throughout the year.
Citigroup’s Aggressive Forecast
Citigroup anticipates a more aggressive approach, expecting the first rate cut in July 2024 and a total reduction of 100 basis points within the year. This forecast contrasts with Deutsche Bank’s more conservative outlook, which predicts a December 2024 cut and a total reduction of 25 basis points.
Goldman Sachs and HSBC’s Moderate Outlook
Goldman Sachs and Evercore ISI foresee the first rate cut occurring in September 2024, with a total reduction of 50 basis points over the year. HSBC also predicts a September 2024 cut but expects a total reduction of only 25 basis points. Jefferies and Mizuho, on the other hand, do not anticipate any rate cuts until 2025.
JP Morgan and Morgan Stanley’s Predictions
JP Morgan projects the first rate cut in July 2024, with a total reduction of 75 basis points over the year. Morgan Stanley expects a September 2024 cut with a similar total reduction of 75 basis points. LH Meyer aligns with Bank of America’s forecast, predicting a December 2024 cut and a 25 basis point reduction.
Other Banks’ Forecasts
MUFG predicts an aggressive approach with the first cut in July 2024 and a total reduction of 125 basis points. Nomura, Oxford Economics, TD Securities, and UBS expect the first cut in September 2024, with a total reduction of 50 basis points. RBC aligns with Bank of America’s forecast, predicting a December 2024 cut and a 25 basis point reduction. Societe Generale does not anticipate any cuts until 2025, while Wells Fargo expects a September 2024 cut with a total reduction of 50 basis points.
Conclusion
The Federal Reserve’s decision to maintain interest rates has led to varied predictions from major banks regarding the timing and magnitude of future rate cuts. While some banks foresee aggressive cuts starting as early as July 2024, others predict more conservative reductions or no cuts until 2025. Investors should stay informed and consider these forecasts when making financial decisions.
