Announcing its interest rate decision on the first day of November, the FED kept interest rates constant in line with expectations.
In its last meeting, the FED said that it would continue to depend on data for interest rate cuts while keeping interest rates constant.
At this point, while the FED is expected to start reducing interest rates in 2024, Wall Street banks disagree on the timing of interest rate cuts.
According to Bloomberg, Morgan Stanley and UBS predict that the FED will make a major interest rate cut starting from the first half of 2024, while Goldman Sachs thinks that the FED will start cutting interest rates only at the end of 2024 and the rate of reduction will be slow.
UBS predicts that discounts will begin in March, assuming that the US economy will enter a recession starting from the second quarter of 2024. According to UBS, this will lead the FED to reduce interest rates.
“Inflation is rapidly normalizing and by March the Fed will be looking at very high real rates,” said Bhanu Baweja, chief strategist at UBS Investment Bank. said.
At this point, UBS strategists stated that they estimate that interest rates will fall between 2.5% and 2.75% by the end of 2024, and will drop to 1.25% in early 2025.
Apart from UBS, Morgan Stanley economists led by chief economist Ellen Zentner also stated that they expect large interest rate cuts and said, “We expect interest rate cuts to start in June 2024. Then, we predict that there will be 25 basis point cuts in September and at each meeting starting from the fourth quarter. This rate of reduction will continue until the end of 2025.” It will reduce it to 2.375%.” they said.
Apart from UBS and Morgan Stanley, Goldman Sachs also expects a cut in interest rates, but does not think it will happen that quickly.
Accordingly, Goldman Sachs believes that the FED will make its first 25 basis point cut in the fourth quarter of 2024. After the first interest rate cut decision, the bank expects there to be a cut every quarter until mid-2026.
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 BTC may return to its old days after a policy change and the start of interest rate cuts.
*This is not investment advice.