Anticipation Builds as Markets Await Federal Reserve’s Rate Moves
Market observers are eagerly anticipating the U.S. Federal Reserve’s decisions on the federal funds rate this year.
Ellen Zentner, Morgan Stanley’s lead economist in the U.S., predicts upcoming rate reductions but emphasizes the central bank’s patience in implementing changes. The market currently anticipates a 25 basis points increase at the next Federal Open Market Committee (FOMC) session, with 95.3% expecting an increase, according to the CME Fedwatch tool. Federal Reserve Bank of Dallas President Lorie Logan emphasizes the need to maintain tight financial conditions to prevent a rebound in inflation. Logan suggests keeping the possibility of another rate increase on the table, considering recent easing in financial conditions.
This follows the FOMC’s December minutes, where the committee discussed restoring standard monetary policy amid ongoing inflation pressures. Economists, including Zentner and Dante DeAntonio of Moody’s Analytics, expect rate reductions, with Zentner predicting the initial cut in June 2024. Powell’s dovish approach and the Fed’s pivot towards discussing rate cuts in 2024 align with market expectations of a soft landing with a cautious approach to rate adjustments.
Clever Robot News Desk 9th January 2024
