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JIN10
2024.09.18 08:19
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FXStreet Summary: Institutional Outlook on the Fed Interest Rate Decision (Part 3) - Likely to cut rates by 25 basis points, opening the door for more rate cuts

Multiple institutions predict that the Federal Reserve will cut interest rates by 25 basis points at the upcoming meeting. Ernst & Young pointed out that this is the first dissenting opinion in 19 meetings and raised its unemployment rate forecast. China International Capital Corporation believes that the rate cut will be intermittent, while Deutsche Bank expects a total of 100 basis points cut by the end of the year. Danske Bank and Nordea also support a 25 basis points rate cut and predict future rate cut pace. CITIC Securities and Deutsche Bank are focusing on the allocation opportunities of short-term US Treasuries and US stocks

  1. EY: Expected to cut interest rates by 25bp, first dissenting opinion in 19 meetings. Remove negative statements about rate cuts. Raise this year's unemployment rate forecast, lower PCE inflation forecast. Powell will express support for the labor market.

  2. CICC: Basically locked in the Fed's 25bp rate cut in September, overall US CPI continues to slow down, but core CPI rebounded for the second consecutive month. The US economy's soft landing accompanied by sticky inflation, rate cuts will proceed cautiously.

  3. Deutsche Bank: Expected rate cut of 25bp, Powell has to show confidence in the outlook, economic forecasts will show a total rate cut of 75bp this year. However, if a 50bp rate cut is chosen, it is expected to cut rates by 100bp by the end of the year.

  4. Danske Bank: Expects the Fed to cut rates by 25bp, QT pace will not change. The new dot plot will indicate a total of 3×25bp rate cuts this year and 6×25bp rate cuts next year. Risks lean towards higher US dollar and short-term bond yields.

  5. Nordea: Expected rate cut of 25bp, with 25bp cuts in November and December, and a 100bp cut next year. This is significantly different from market expectations, which may disappoint. Powell will open the door to more frequent and larger rate cuts.

  6. CITIC Securities: US August CPI basically meets expectations, rental inflation cooling trend is not reversed, maintaining the forecast of three 25bp rate cuts by the Fed this year. Pay attention to opportunities for short-term US Treasuries and defensive US stocks.

  7. Deutsche Bank: Expected rate cut of 25bp, although the market expects a slightly higher than 50% chance of a significant initial rate cut by the Fed. However, the small first step does not rule out larger actions in the future, with the current risk leaning towards a weaker US dollar

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