According to a recent report, Capital Economics analysts predict that the FED will make its upcoming interest rate decisions faster than anticipated.
According to analysts, the slowing US economy is expected to prevent the FED from increasing interest rates further and lead to an interest rate cut earlier than expected, thus stimulating stock markets.
The report discusses the “higher interest rates for longer” discourse currently dominant in the markets and suggests that this situation may not continue until 2024.
Despite hawkish signals from the Fed, markets remain reluctant to factor in another rate hike. Instead, they are pricing in rate cuts to begin in mid-2024, slightly ahead of the Federal Open Market Committee (FOMC) projections.
But Capital Economics analysts think these rate cuts will start earlier and move faster than currently reflected in Fed funds futures. Finally, the report expressed the view that these earlier-than-expected interest rate cuts could trigger a decline in long-term interest rates and a rally in risky assets.
*This is not investment advice.
