According to some analysts, the FED is expected to implement aggressive easing measures in the face of slowing inflation.
Economists at Pantheon predict that the Fed will cut interest rates by 25 basis points in September, followed by twice as large cuts in November and December. This represents a much more aggressive easing than the one or two cuts that markets expected and officials predicted for 2024.
Economists argue that future data will show that the acceleration in the 1st quarter was an anomaly and that the disinflation trend has become ingrained. As a result, Pantheon predicts that there will be a strong rally in Treasuries and that the 10-year bond yield will fall to 3.25% by the end of the year. This would be the lowest level since late 2022. As of today, the 10-year yield stands at 4.286%.
Regarding the issue, Atlanta FED President Raphael Bostic announced today that he stuck to his forecast of a quarter point interest rate cut in the October-December quarter this year. “Given all the circumstances, I continue to believe that conditions will require a reduction in the federal funds rate in the fourth quarter of the year,” Bostic said in a new article published on his regional bank's website.
*This is not investment advice.