AFMC - Rate Cut By The Fed: Here Is What To Expect For Your Portfolio
2024-07-02 07:30:40 ET
Summary
- The Fed is expected to cut interest rates only once in 4Q 2024.
- US macroeconomic statistics show decreasing inflation and low unemployment rates.
- Portfolio strategies should include diversification to prepare for potential recession or economic growth.
The Fed is widely expected to cut interest rates only once this year and only in the fourth quarter of 2024. On the surface, all looks very good. After all, the labor market is reasonably strong, while the inflation numbers have not reached the Federal Reserve's target of 2%. But unfortunately, higher rates are an additional burden for the economy and investors' portfolios. There is a risk that one rate cut might not be enough to support the economy. In this article, I will discuss how the decision to cut interest rates only once might impact your portfolio.
The Fed's news
The Fed's members seem to be rather cautious about the progress on inflation. The Fed's Bostic said that as things stand, he continues " to believe conditions will likely call for a cut in the federal funds rate in the fourth quarter of this year. " He also explained that one reason to be "patient" with that rate cut is to bring inflation back to the 2% mark. His colleague, Mary Daly, is also cautiously optimistic about America's battle with inflation. She also emphasized the need for the Fed to remain data-dependent to make sure inflation is on a sustainable path toward the 2% goal. According to Daly, if inflation slows down more than forecast, the Fed would likely have to keep rates higher for longer....
Rate Cut By The Fed: Here Is What To Expect For Your Portfolio