The Federal Reserve (Fed) left rates unchanged in July, as widely expected, and Powell puts a rate cut on the table in September, assuming conditions are met, notes UOB Group economist Lee Sue Ann.
The risk of further delaying cuts is now better balanced
“The Fed, at its July 30/31, 2024 Federal Open Market Committee (FOMC) meeting, unanimously agreed to keep the target range for its Federal Funds Rate (FFTR) unchanged at 5.25%-5.50%. This was widely expected and marked the eighth consecutive pause. The Fed also voted unanimously to keep the interest rate paid on reserve balances (IOER) unchanged at 5.40%.”
“The significant change in the July monetary policy statement (MPS) was the shift in the Fed’s focus to the dual mandate rather than just inflation. Powell’s subsequent comments were seen as dovish, putting a rate cut on the table in September if inflation cools in line with expectations and strong labor market conditions continue.”
“After holding the FFTR steady at 5.25%-5.50% at the July FOMC, we continue to hold the view that the Fed will subsequently begin to ease monetary policy in late Q3, where we envision 50 basis points of rate cuts for the remainder of 2024 (i.e., two 25 basis point cuts, one each at the September and December FOMCs). The risk that the Fed will delay cuts further if the decline in inflation stalls again is now better balanced by the evident cooling in the labor market.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
