[ad_1]
The Federal Reserve started its rate-cutting cycle in September by implementing a 50 basis-point reduction to policy rates, signaling a shift in monetary policy. This move marked the first rate cut in the US since 2020. According to analysts at Wells Fargo, the decision reflected concerns about the job market and less worry about Inflation.
Federal Open Market Committee members anticipate a slight increase in unemployment to 4.4% for 2024 and 2025, with GDP growth projected at 2.0% annually during the same period. The labor market is seen as cooling but not significantly, with Inflation expected to continue declining.
Market projections differ from the Fed’s expectations, with the market pricing in more aggressive rate cuts for 2024 and 2025. However, Wells Fargo strategists believe the market may be overly optimistic, as the current state of the labor market may not support such aggressive cuts as anticipated.
Looking ahead, analysts caution against expecting the Fed to implement all projected rate cuts, as economic conditions may not necessitate such drastic measures. They suggest a more realistic scenario of additional rate cuts in 2024 and 2025.
Overall, the outlook remains cautious, with the potential for Inflation to resurge by mid-2025, limiting the Fed’s ability to carry out all projected rate cuts. A more moderate approach with additional rate cuts in 2024 and 2025 is deemed a realistic scenario by Wells Fargo analysts.
[ad_2]
SOURCE
Emma Collins, graduated in Financial Economics from the University of Chicago in the USA in 2016. She has since worked at an asset management firm in New York, where she specializes in investment strategies and portfolio management. Emma has a keen interest in financial analysis and has published several articles in renowned financial journals. Her work focuses on providing actionable insights to investors, and she is known for her forward-thinking approach to managing financial portfolios.
