With just two days remaining until the FED’s July interest rate decision, Fitch Ratings has released its latest forecasts for the US Federal Reserve’s Federal Open Market Committee (FOMC). According to Fitch, they expect the FED to cut interest rates twice by the end of the year. The report cited interest rate increases in 2023 as having an impact on the US labor market and demand, but also highlighted politics as an area of high uncertainty for interest rate cuts. Additionally, geopolitical risks were identified as a permanent concern.
Fitch’s report noted that due to the ongoing decline in inflation, they anticipate interest rate cuts from the FED in 2024 to be slightly slower than previously forecasted. The latest US inflation and labor market data align with Fitch’s expectations, leading them to believe that two rate cuts are likely in the second half of 2024. In comparison, back in March, Fitch Ratings had predicted the FED would cut interest rates three times, amounting to a total of 75 basis points, by the end of 2024.
It is important to note that Fitch Ratings’ analysis and forecasts are not to be taken as investment advice. The FED’s decision on interest rates is eagerly anticipated by market participants and investors alike, as it can have a significant impact on various sectors of the economy. The prospect of two interest rate cuts by the end of the year provides insight into Fitch’s expectations for the US economy’s growth and stability in the months ahead.
While interest rate cuts can help stimulate economic growth by making borrowing cheaper for businesses and consumers, they also reflect concerns about potential slowdowns or risks in the economy. The FED’s decisions are influenced by a variety of factors, including inflation rates, employment data, global economic conditions, and political developments. As such, Fitch’s forecasts offer valuable insights into the FED’s thinking and potential actions in response to evolving economic conditions.
In conclusion, Fitch Ratings’ prediction of two interest rate cuts by the FED in 2024 highlights their expectations for the US economy’s path ahead. With uncertainties surrounding politics and geopolitical risks, the FED’s decisions on interest rates will play a crucial role in shaping economic conditions and market expectations in the coming months. Investors and analysts will be closely watching the FED’s July interest rate decision to gauge the direction of monetary policy and its potential impacts on the economy.
