FXStreet Summary: Institutional Outlook on the Fed Interest Rate Decision (Part 2) - Likely to cut rates by 25 basis points, dot plot softens hawkish stance, economic forecasts support further rate cuts

JIN10
2024.09.18 04:35
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Goldman Sachs, Fitch Ratings, Societe Generale, Citibank, DBS Bank, ANZ Bank, and Morgan Stanley and other institutions predict that the Federal Reserve will cut interest rates by 25 basis points, with the possibility of more rate cuts in the future. Goldman Sachs believes that there is a high possibility of three rate cuts, while Fitch Ratings expects rate cuts of 125 basis points in 2025 and 75 basis points in 2026. Societe Generale and Citibank also support the view of rate cuts, believing that economic forecasts will support further cuts. Overall, the market's expectations for rate cuts by the Federal Reserve are gradually increasing

  1. Goldman Sachs: Expected to cut interest rates by 25bp, the threshold for a hawkish surprise will be higher. If forecasts show a total of 3 rate cuts this year and 5 or more next year, the market can still see it as a faster return to a neutral level.

  2. Fitch Ratings: Expected to cut rates by 25bp in September and December, with cuts of 125 basis points and 75 basis points in 2025 and 2026 respectively. The Fed will cut rates at a relatively moderate pace as there is still work to be done on inflation.

  3. BNP Paribas: Expected to cut rates by 25bp, with cuts of 25 basis points in November and December, and 100 basis points next year. Economic forecasts will support more rate cuts, with the 2027 forecast reflecting a continued soft landing scenario.

  4. Citibank: Expected to cut rates by 25bp, but the probability of cuts of 25 and 50 basis points is very close. The dot plot or hints of a dovish rate cut suggest a 100 basis point cut this year. Powell will be very dovish.

  5. DBS Bank: Expected to cut rates by 25bp to better manage the market, with further cuts in November and December, reaching a year-end rate cap of 4.75%. The dot plot may reflect a total cut of 75bp this year, but may disappoint the market slightly.

  6. ANZ Bank: Expected to cut rates by 25bp, with a total cut of 200 basis points in this easing cycle. The Fed will slightly raise GDP growth expectations for 2024 and unemployment rate expectations for 2024. Future attention will be paid to layoff data.

  7. Morgan Stanley: Expected to cut rates by 25bp, the dot plot will show 3 rate cuts this year. Powell will reiterate that policy still depends on data. Economic forecasts for 2024 will raise the unemployment rate and lower the core PCE inflation rate

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