JPMorgan and Goldman Sachs Expect Fed’s First Interest Rate Cut in July

• The Federal Reserve is expected to keep the interest rate unchanged after the FOMC meeting.
• JPMorgan and Goldman Sachs believe the Fed will reduce interest rates in July.
• While Wells Fargo hopes that the Fed will cut rates in September, Bank of America posits that no reduction will happen until December.

The Federal Reserve is expected to hold the interest rate unchanged at the two-decade high of 5.25% to 5.5% after the Federal Open Market Committee (FOMC) meeting. While the two-day meeting began on Tuesday, market observers divided over the views on the Fed’s decision on Wednesday.

Chinese crypto journalist Coil Wu shared an X post on Wu Blockchain, shedding light on the diverse forecasts from major industry players. Notably, financial giants JPMorgan and Goldman Sachs expect the Fed’s first interest rate reduction this year in July. At the same time, the financial services company Wells Fargo believes that the Fed will cut rates in September.

CNN: JPMorgan and Goldman Sachs expect the first cut in July, while Wells Fargo is betting on September. Bank of America doesn’t expect the first cut until December. Some Fed policymakers, meanwhile, have even floated the possibility of a rate hike, instead of a cut.…

— Wu Blockchain (@WuBlockchain) May 1, 2024

Reportedly, there is approximately a 44% chance for the Fed to cut interest rates in September. However, Bank of America strongly believes the Fed will not cut the rate until December. Meanwhile, some Fed policymakers hint at a possible interest hike rather than a cut.

In an April 16 meeting, Fed Chair Jerome Powell hinted at a longer period of high-interest rates and the central bank’s preference to keep policy restrictive “as long as needed.” Meanwhile, Bloomberg economists cited,

“We expect Powell to make a hawkish pivot at the April 30-May 1 meeting. At the minimum, he’ll likely indicate the median FOMC participant now expects ‘less’ cuts this year. In a more hawkish direction, he could hint at a chance of no cuts — or even suggest a hike might be on the table, though not the current baseline.”

Until it is clear that the inflation is closing in on 2%, the Fed will not lower the rates. Michael Gapen, Head of US Economics at Bank of America Corp, stated, “The message will be wait-and-see and policy needs more time to work.”

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