After a period of aggressive interest rate increases, the FED, along with the European Central Bank and the Bank of England, suspended their tightening programs in the second half of the year.
It was noted as an important development that at the FED's December meeting, officials published projections showing that they expected the benchmark federal funds rate to be reduced by 75 basis points in the next 12 months.
Many banks made predictions about the first interest rate cut in 2024 and the total amount of discounts during the year. Here's a summary of his predictions:
- Bank of America: First discount in March, total discount 100 BPS
- Barclays: First discount in June, total discount of 75 BPS
- BNPP: First discount in May
- Citigroup: First discount in July, total discount of 100 BPS
- Deutsche Bank: First discount in June, total discount of 175 BPS
- Evercore ISI: First discount in June, total discount 125 BPS
- Goldman Sachs: First discount in March, total discount 125 BPS
- HSBC: First discount in June, total 75 BPS discount
- Jefferies: First discount in March, total discount 225 BPS
- JP Morgan: First discount in June, total discount 125 BPS
- LH Meyer: First discount in June, total discount 75 BPS
- Morgan Stanley: First discount in June, total discount 100 BPS
- MUFG: First discount in March, total discount of 175 BPS
- Nomura: First discount in June, total discount 100 BPS
- Oxford Economics: First discount in July, total discount 50 BPS
- TD securities: First discount in May, total discount 200 BPS
- UBS: First discount in March, total discount 275 BPS
- Wells Fargo: First discount in June, total discount 225 BPS
Neil Shearing, group chief economist at UK-based Capital Economics, noted that growth is weakening as the disruptions caused by the Covid-19 epidemic and the global energy crisis are resolved. Shearing said the following on the subject:
“We expect inflation to fall more than central banks expect. Policy is quite restrictive at the moment, so central banks can ease without having to be supportive of growth. Think of this as stepping on the brakes less, rather than stepping on the gas.”
*This is not investment advice.