When Will FED's First Interest Rate Cut Come? How Many Interest Rate Cuts Will There Be? Citi Analysts Announced Their Expectations for 2024 and 2025!

The FED takes a cautious stance on interest rate cuts, despite positive economic data showing that inflation has begun to decline.

FED President Jerome Powell and FOMC members state that interest rate inflation has fallen, but they want to see more positive data for interest rate cuts.

While there is little time left for the FED to announce its July interest rate decision, the earliest interest rate cut is expected to be September.

At this point, according to FED Watch, the probability of interest rates remaining constant in July is priced at 95.3%, while a 25 basis point reduction in the meeting on September 18 is priced at 73.6%.

While the earliest date for a rate cut is September, Citi analysts also announced their current forecasts.

According to Fourtune, analysts led by Citi US Chief Economist Andrew Hollenhorst expect the FED to cut interest rates by 25 basis points eight times starting in September 2024.

Accordingly, analysts said that they expect the FED to reduce the interest rate from the current 5.25%-5.5% to 3.25%-3% by making a total of 200 basis points of reduction in 8 months until July 2025.

Finally, Citi analysts predict that interest rates will remain at 3.25%-3% for the rest of 2025.

Stating that these predictions are based on data such as economic slowdown, weakening inflation, increasing unemployment and negative service sector index, analysts said that the economy has cooled considerably from its peak in 2023 as inflation continues to slow down after an unexpected recession.

“Continuing to weaken inflation will, in our baseline scenario, lead to interest rate cuts at each of the next seven Fed meetings.”

*This is not investment advice.