Fed Will Cut Rates This Year, According to Bloomberg Analyst

Bloomberg analyst Mike McGlone anticipates significant developments at the Federal Reserve, foreseeing potential interest rate cuts in response to recent shifts in US equities.

This marks a pivotal moment as the central bank navigates a changing economic landscape characterized by easing inflationary pressures and softening labor market conditions.

McGlone draws comparisons to historical rate hike cycles, highlighting precedents where rate reductions followed extended periods of tightening policy, potentially mirroring the current trajectory.

Yeah, the Fed’s gonna cut rates. From 2004-06, the #FederalReserve hiked 425 bps and the surprise index floor came in December 2006. September 2007 marked the first rate cut. July 2023 was the last of 525 bps of rate hikes that started in 1Q22. Sticky #inflation may delay Fed… pic.twitter.com/sYl6xnD214

— Mike McGlone (@mikemcglone11) July 13, 2024

Federal Reserve Chair Jay Powell and other officials signal readiness to adjust monetary policy, citing improved control over inflation and a cautious approach to sustaining economic growth. Recent economic data supports the case for easing, with indicators pointing towards manageable inflation levels and moderate job market adjustments.

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This backdrop sets expectations for the Fed to announce a 25 basis point rate cut in September, with potential for additional measures depending on economic indicators and global financial developments.

Market sentiment reflects growing confidence in the Fed’s ability to steer a balanced course, with traders pricing in anticipated rate cuts to stimulate economic activity and bolster market stability.

The Fed’s strategy aims for a “soft landing,” aiming to curb inflationary pressures without jeopardizing employment gains, aligning with global efforts among central banks to foster sustainable economic recovery in the post-pandemic era.

Alexander Stefanov