Barclays Predicts One Fed Rate Cut in 2024 After Strong CPI Data
Barclays’ Revised Forecast
Barclays’ economics team adjusted their prediction for the U.S. Federal Reserve’s rate cuts in light of the recent consumer price index (CPI) data. They now anticipate only one 25 basis points (bps) rate cut in 2024, compared to their previous projections.
Surprising CPI Data
The latest CPI data showed a significant increase in U.S. consumer prices for the third consecutive month, surpassing expectations. This follows a robust jobs report released earlier, indicating a strong economic performance.
Barclays’ Analysis
Barclays’ note highlighted that the recent CPI data might impact the Federal Open Market Committee’s (FOMC) outlook on inflation reaching the target of 2%. They now believe the FOMC will delay rate cuts, with only one expected in September.
Possible Timing for Rate Cut
While Barclays forecasts a potential rate cut in September, they acknowledge the possibility of a delay until December. This decision would depend on the progress of inflation reaching the desired levels.
Future Rate Targets
Barclays predicts the fed funds target range to be between 5.00% and 5.25% by the end of 2024, with further reduction to 4.00% to 4.25% by the end of 2025.
Summary
In conclusion, Barclays’ updated forecast reflects the impact of recent economic data on the Fed’s rate cut decisions. The evolving economic landscape suggests a cautious approach towards monetary policy adjustments in the coming months.
