Report
Has the consensus on the scale of the Federal Reserve's rate cuts become correct?
In early January, the consensus among investors was that the Federal Reserve would cut interest rates by 150 basis points by the end of 2024. In late February 2024, they expect only a 75 basis point cut in the Fed Funds rate. We believe that this revision of the scale of rate cuts is reasonable. We are much more comfortable with 75 basis points than with 150 basis points of Fed Funds rate cuts between now and the end of 2024. This opinion is based on observation of: Core inflation; The fact that the Federal Reserve includes rents imputed to homeowners in its definition of inflation, and rents are continuing to rise rapidly; The continuing strong rise in prices of services excluding shelter; The fact that growth remains strong in the United States, exceeding potential growth in 2023.
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Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
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