The experts at Goldman Sachs do not think that the US interest rate cuts will happen in May anymore but have predicted four cuts of 25 basis points each this year. The policymakers do not seem to be in a hurry to change things, resulting in no US interest rate cut in the near future.
Christopher Waller, Federal Reserve Governor, has said he wants to look at a few more months of price data before deciding if the economy is doing well.
Goldman Sachs experts said that because there’s not much data on inflation yet and only a bit of time before the May meeting of the Federal Reserve, it’s unlikely they’ll lower rates in May. They now think there will be an extra rate cut next year instead, but the final rate will likely stay between 3.25% and 3.5%.
Future of US Interest Rate Cuts
Waller recently said that policymakers should wait a couple more months before going forward with the US interest rate cut to see if the recent price increase means the economy is having trouble or if it’s just a temporary issue.
Prices for everyday items increased by 0.4% in January, which is more than what the Federal Reserve had predicted for yearly inflation. Moreover, the economy grew by 3.3% in the last quarter of the year. In January, more than 350,000 jobs were added to the US economy.
The Federal Reserve has hinted that interest rate cuts are coming, but not until at least spring. They have raised rates 11 times between March 2022 and July 2023 to fight inflation. After their December 2023 meeting, they planned to make three cuts by the end of 2024, aiming for a benchmark rate of 4.6%.
Prices have begun to decrease, but the Fed officials want a better look at data before making a move. At their first 2024 meeting, which took place on 30 January and 31 January, the Federal Open Market Committee (FOMC) kept interest rates steady at 5.25 to 5.5%, which have been the highest in over 20 years.
The Federal Reserve has seven more chances this year to lower rates, especially with the next meeting taking place on 19 March and 20 March.
The FOMC meets eight times a year to discuss changes in the federal funds rate which affects overnight lending between banks. Led by Federal Reserve Chair Jerome Powell, the group of 12 looks at inflation, employment, borrowing rates, and more before making any decisions as such.
Here are the dates the FOMC will meet in 2024:
- March 19 to March 20, 2024
- April 30 to May 1, 2024
- June 11 to June 12, 2024
- July 30 to July 31, 2024
- Sept. 17 to Sept. 18, 2024
- Nov. 6 to Nov. 7, 2024
- Dec. 17 to Dec. 18, 2024
The chair of the Federal Reserve has said a rate cut this year could be right, but it’s not likely to happen in March. So, the next chance for a cut is at the May 1 meeting.
Read more:
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