According to Reuters’ latest survey of economists, the FED is expected to maintain its benchmark interest rate as a result of its policy meeting to be held on September 19-20.
The survey shows any rate cut is unlikely before the second quarter of 2024.
According to the survey conducted between September 7-12, more than 95% of economists (94 of 97 economists) predict that the Federal Reserve will keep the federal funds rate in the current range of 5.25%-5.50%. However, nearly 20% of economists (17 out of 97) expect at least one more rate hike before the end of the year.
Brett Ryan, a senior US economist at Deutsche Bank, said that while he expects the Fed to maintain interest rates at its September 20 meeting, it would not be surprising if most officials continue to predict another rate hike by the end of the year in the updated ‘dot chart’.
The US unemployment rate rose to 3.8% in August, raising hope among those who oppose a new interest rate hike that the US labor market may be cooling. But the Reuters poll predicts the unemployment rate will average 3.7% this year and rise marginally to 4.3% in 2024.
As the brief correction in the U.S. housing market appears to be over, home prices and rents are expected to remain high. This could potentially slow the decline in inflation, which is estimated to not reach the Fed’s target until at least 2025. This suggests that any rate cuts may still be some way off.
Of the 87 participants who made predictions for the period until mid-2024, 28 predicted that the first interest rate cut would occur in the first quarter, and 33 predicted that it would occur in the next quarter. Approximately 70% of these participants (62 out of 87 participants) predicted that there would be at least one interest rate cut by the end of next June.
*This is not investment advice.