FXStreet Summary: Institutional Outlook on the Fed Interest Rate Decision (Part Four) - Not ruling out an initial 50bp cut, Powell's stance and the subsequent rate cut path are uncertain

JIN10
2024.09.18 08:46
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Multiple institutions have different predictions on the upcoming rate cut by the Federal Reserve. Both Bank of Canada and Fidelity Bank expect a 25 basis point cut, with Fidelity Bank also considering a 50 basis point cut within expectations. Montreal Bank and ING International lean towards a 25 basis point cut, but do not rule out the possibility of 50 basis points. JP Morgan and Mitsubishi UFJ predict a 50 basis point cut, with the former expecting a total cut of 100 basis points this year. Evercore ISI believes that a 50 basis point cut will initiate an easing cycle. Powell's stance and the future rate cut path still remain uncertain

  1. Credit Suisse: Expects the Fed to cut interest rates by 25bp, with the economic forecast summary showing a median rate cut of 75 basis points this year. Powell will remain cautious, hinting at future rate cuts without committing to a predetermined path.

  2. UBS: Expects a 25bp rate cut, with the August CPI data reinforcing the Fed's determination. A 50 basis point cut would not be surprising. Still expects the Fed to cut rates by 50 basis points at some point.

  3. Bank of Montreal: Expects a 25bp rate cut. The dot plot may show three rate cuts this year, with some participants expecting a total cut of at least 100 basis points this year. The long-term or "neutral" interest rate level may be raised.

  4. ING: Leans towards expecting a 50bp rate cut, but the latest employment and inflation data suggest a higher probability of a 25bp cut. Powell may take a relatively dovish stance, opening the door at some point for a larger rate cut.

  5. J.P. Morgan: Expects a 50bp rate cut, with the dot plot showing a total cut of 100 basis points this year and 150 basis points next year. Economic forecasts will see relatively modest changes. Expects no changes to the balance sheet policy.

  6. Mitsubishi UFJ: Expects a "hawkish" 50 basis point rate cut, with a total cut of 100 basis points this year to promptly return the monetary stance to a neutral level. However, Powell may emphasize that overall data weakness is more important than recent CPI figures.

  7. Evercore ISI: Expects to kick off a loose cycle with a 50bp rate cut to ensure further easing of inflation while the economy continues to expand. Up to three dissenting members, rare breaking the consensus Powell has been striving for

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