As the Federal Reserve prepares for its 2024 policy decisions, there is a strong expectation that key fund rates will be cut. Both experts and market participants anticipate this move, supported by recent favorable data. Inflation has shown consistent cooling, with the annual rate dropping to 3% in June 2024, the lowest since the previous June, and core inflation reaching a new low of 3.3% since April 2021.
Despite these positive indicators, the Fed’s current stance has shifted from an anticipated three rate cuts this year to just one, likely by 25 basis points in September. The pressing question is whether the Fed, led by Jerome Powell, should delay this decision any further or act sooner. Why not cut rates on July 31?
ING experts believe that, despite recent favorable data, the Fed will likely maintain its current monetary policy at the upcoming FOMC meeting. They suggest that the Fed may use this opportunity to signal a potential rate cut at the September meeting. With inflation behaving better, rising unemployment, and signs of cooling consumer spending, the Fed’s goal of a "soft landing" seems achievable. If conditions continue to improve, a rate cut may become a viable option.
