The U.S. Federal Reserve (Fed) announced on the 19th of this week, Taiwan time, that it would lower the federal benchmark interest rate by 0.5% (2 yards) to 4.75% ~ 5%, officially announcing the end of the most aggressive interest rate hike cycle since the 1980s.
After the Fed announced its decision to cut interest rates, both the U.S. stock market and the cryptocurrency market responded positively. However, as Fed Chairman Ball emphasized at the post-meeting press conference that this sharp interest rate cut cannot become the norm, investors began to pay attention. 11 and What will be the rate cut in December?
Fed dot plot shows 2 more rate cuts to come this year
According to the Fed's latest interest rate dot plot, policymakers expect to cut interest rates by a total of 2 yards in the last two meetings of this year. However, the process is still full of variables: it may be a 1 yard cut in each of these two meetings, or Among these 2 meetings, there may be a 2-yard rate cut in one meeting.
JP Morgan analyst: Rate cut will be 2% in November
At present, the Fed's next interest rate decision is still attracting attention. Michael Feroli, chief economist of JPMorgan Chase, said that the Fed will cut interest rates faster than the consensus of policymakers:
If the next two jobs reports show further weakness, a 50 basis point cut will be expected at the next meeting in November.
In addition, JPMorgan Chase CEO Dimon also said at yesterday's Atlantic Festival event that he is skeptical about a soft landing of the U.S. economy after interest rate cuts:
I am more skeptical than others about whether the U.S. economy can have a soft landing. I certainly hope the outcome will be good, but I am more skeptical that inflation will disappear so easily. It is not that it has not declined, but it is necessary to consider whether it can continue. Drop more.
However, according to a Reuters survey, 86 of the 107 economists interviewed believe that the Fed will cut interest rates by 25 basis points in November and December respectively, and by the end of 2025, interest rates will be reduced to 3.25% to 3.5%. %.
Currently, according to Fedwatch data, the probability of a one or two rate cut in November is about 50-50. Since there is still nearly a month and a half left, the changes are still very large.
Bank of America: Fed’s focus now is on employment data
There are two main changes in this FOMC statement: first, it emphasizes that the authorities have increased confidence in combating inflation; second, the authorities have begun to focus on employment, and a new part indicates that they are committed to supporting full employment.
Analysts at Bank of America also said in a report recently that after the Fed made it clear that it will pay more attention to the job market, next week's inflation data may not appear so critical:
We continue to believe that the combination of a dovish Fed and a resilient economy will result in a steeper yield curve, including a steeper break-even curve.
Bank of America predicts that August PCE data to be released next week may increase by 0.1% month-on-month, down from 0.2% in July.
