Market expectations of interest rate cuts by the Federal Reserve do not match current reality: There have been many expectations regarding the Federal Reserve to reduce interest rates.
In this report, Evest provides you with all the information about reducing interest rates and all the information about all expectations.
Topics
Investors and Analyst’s speculation
Fed unable to cut interest rate
BlackRock Company
BlackRock expects investors will be disappointed if they expect
a sharp cut in interest rates by the Federal Reserve this year.
The weekly note by strategists at the world’s largest asset manager
stated that the odds indicate that interest rates will not be cut based on market expectations,
due to the expectation of a recovery in inflation later this year
due to accelerated wage growth in a tight labour market.
New survey data from the Federal Reserve Bank of New York showed
that Americans’ expectations for inflation in the coming years fell sharply in December and are almost back to pre-pandemic levels.
Geopolitical tensions
The Geopolitical tensions are expected to increase price pressures in the future,
which will reduce the possibility of monetary policy easing by the Federal Reserve.
Geopolitical tensions often affect global commodity supply chains and cause fluctuations in raw material prices.
Investors and Analyst’s speculation
Investors and analysts have recently increased their bets on a cut in US interest rates
this year based on signals from the Federal Reserve that it is considering easing monetary conditions.
UBS expects four cuts to its benchmark borrowing costs this year.
This forecast received strong support in the stock and bond markets in November and December,
with the S&P 500 rising 14% during that period.
Fed unable to cut interest rate
In light of this, analysts led by Jean Boivin expect that the Fed may be unable
to implement the interest rate cuts expected by markets, even as growth moderates.
Annual inflation fell to 3.1% in November after reaching a 40-year high in mid-2022.
Although the pace of price increases is expected to slow in recent quarters,
inflation will remain at high levels over the coming period.
Conclusion
Finally, it should be noted that these forecasts are subject to change
and may be affected by many different factors, such as economic, political and geopolitical developments.
Therefore, investors should follow current developments and be ready to adapt to changes in the economic and financial market environment.
Market expectations of interest rate cuts by the Federal Reserve do not match current reality