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FOMC to cut rates five times in 2024 – TDS

FOMC to cut rates five times in 2024 – TDS

New Fed call: TD Securities economists now expect the FOMC to cut rates five times this year starting in May.

May is the most likely date for the Fed to begin easing its monetary policy

The notable changes in macroeconomic data and the Fed's likely inclination to pre-emptively ease rates have led us to assign higher probabilities to a softer landing scenario for the US economy this year. Against this backdrop, we now expect the FOMC to cut rates five times in 2024, and for the Fed funds rate to end the year at 4.00%-4.25%. We continue to expect the Fed to reach its neutral policy stance at 2.75%-3.00% by the end of 2025.

Given our still very constructive outlook on inflation, we continue to think May is the most likely meeting at which the Fed can begin to ease policy. In our view, inflation will likely determine when the Fed begins to ease policy, while economic activity will determine the pace and magnitude of rate cuts.

A still strong growth profile currently allows the Fed to be patient as it tries to gather more confirmation that underlying price disinflation is not a temporary phenomenon. However, we believe that at the first clear sign of slowing growth, the Fed will react more quickly to ease monetary policy.

Source: Fx Street