Wall St brokerages bring forward Fed rate cut expectations

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Wall Street brokerages brought forward their expectations for the U.S. Federal Reserve's first interest rate cut.

Article originally published by Reuters. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

Published by

14 Dec 2023

Wall Street brokerages brought forward their expectations for the U.S. Federal Reserve's first interest rate cut, with Goldman Sachs now seeing a March start to the easing cycle, after the central bank struck a dovish tone overnight.

Goldman Sachs expects three consecutive 25 basis-point (bps) rate cuts — in March, May, and June — followed by one per quarter after that. They had previously expected only two cuts next year.

J.P.Morgan sees the first cut in June versus their earlier forecast of July, and the benchmark rate lower by 125 bps by the end of 2024. Barclays also anticipates a June beginning to easing and two more cuts in every other meeting next year. That compares with their previous prediction of just one cut in December 2024.

The Fed on Wednesday kept rates unchanged, as expected, and Chair Jerome Powell said a historic monetary policy tightening cycle is likely over as inflation falls faster than expected and a discussion