While expectations for the FED to cut interest rates in 2024 are increasing, there are many ideas about when the interest rate cuts will begin in 2024 and how much they will be.
While ideas about the FED's interest rate cut are increasing, interest rate cut predictions continue to come from famous names in the market.
The latest on this point came from JP Morgan Chief Investment Officer Bob Michele.
Speaking to the Financial Times, Bob Michele said that if the labor market continues to cool, the US Federal Reserve may cut interest rates by 250 basis points in 2024 to reduce real returns.
“The Fed interest rate of 5.5% was designed to keep inflation down and the unemployment rate near 3%.
However, inflation has fallen a lot. One of the things we like to look at is the six-month annualized rate of core personal consumption expenditure inflation.
By this measure, inflation is at 1.9%, below the Fed's 2% target.
Therefore, although the FED has not increased interest rates since July, policy has become tighter. “At this point, the FED has a lot of capacity to reduce interest rates and should start reducing interest rates now.”
Pointing out that if the Fed makes a 250 basis point cut, the interest rate will drop to 2.75%-3%, Michele said, “I take my hat off to the FED. They planned a soft landing. They came very close to the 2% inflation target. The unemployment rate is 24 months.” “It has remained at or below 4 percent consecutively. They have fulfilled their dual mandate of full employment and price stability.” said.
However, the JP Morgan manager stated that he thought that the soft landing planned by the FED was a bit difficult to sustain, and said that the best and logical option to ensure the continuation of the existing positive situation was to start reducing interest rates gradually.
Otherwise, if interest rates are reduced too quickly, we may face the risk of inflation and interest rates accelerating again.
Bitcoin hit its peak of $69,000 in November 2021, when the FED started increasing interest rates. Since the subsequent bear market is directly related to the FED's interest rate increases, it is thought that a policy change here may return BTC to its old days.
*This is not investment advice.