Further interest rate cuts are on the horizon, according to experts.
Earlier this month, the US Federal Reserve cut interest rates by a surprising 50 basis points. The move lowered the benchmark policy rate to a range of 4.75%-5.00%, the first reduction of its kind in over four years. It marked a significant shift in its monetary policy amid concerns over the labour market and global economic outlook.
Will it continue to cut rates? Currently, futures imply a 50% probability the Fed will deliver another cut in its next meeting, scheduled for November.
Looking at expert predictions, JP Morgan Chase & Co. analysts, who correctly predicted the Fed’s 0.5-point interest rate cut, believe that a further reduction will depend on the weakening of the US labour market. In particular, Michael Feroli, the bank’s chief US economist, anticipates a further cut of 50 basis points in November, subject to the results of the forthcoming employment reports.
In contrast, other banks, such as Goldman Sachs, are now planning more gradual reductions from November and until 2025.
Overall, analysts are paying attention to the data set to be released this week such as the Core Personal Consumption Expenditures (PCE), as well as surveys on global manufacturing, U.S. consumer confidence and durable goods.
Moreover, much will depend on the statements made during the scheduled public appearances of nine Fed policymakers, including prepared remarks from Chair Jerome Powell, two governors and New York Fed President John Williams.
