SGOV - FOMC Preview: Fed Remains Inclined To Cut
2024-03-14 17:00:00 ET
Summary
- While there is little prospect of an imminent policy change, the Federal Reserve thinks it will likely be appropriate to cut rates and move its stance towards a more neutral footing later this year, assuming the data cooperates.
- Monetary policy is in restrictive territory, and we see scope for the Fed to cut rates by 125bp this year, starting in June.
- We are also seeing evidence that the jobs market is cooling even if it is yet to show up in payrolls numbers.
By James Knightley , Francesco Pesole , & Padhraic Garvey, CFA
Rates held, but a bias to easing set to remain
US growth, jobs, and inflation data remain too hot for the Federal Reserve to contemplate imminent interest rate cuts with some commentators still arguing the Fed has more work to do to control inflation. However, there is little prospect of action at next week’s meeting, with Chair Jerome Powell stating that both he and his colleagues "believe that our policy rate is likely at its peak for this tightening cycle" when appearing before Congress on 6 March. Indeed, we (like the market) think the next move is a cut, most likely in June since Powell also suggested that officials are “not far” from having the confidence to “dial back” on the restrictiveness of monetary policy....
FOMC Preview: Fed Remains Inclined To Cut