When Will The Fed Actually Cut Rates? Financial Industry Giants Appear to Give Insights!


 Laura Cooper, a macro investment strategy analyst at BlackRock, and several banks, including Bank of America, expect no rate cuts in the coming months of the year. The United States Central Bank (Fed) has kept the Fed funds rate at 5.25%-5.5% for the third consecutive meeting in December as inflation continues to decline and Fed policymakers expect a "soft landing".

Laura Cooper, senior macro investment strategy analyst at BlackRock, in an interview with Bloomberg on January 19, said the US Central Bank (Fed) will not start rate reductions in March. He added this week's retail sales showed the resilience of the US economy, clearly indicating the Fed could hold off on rate cuts.

Cooper indicated inflation was still above their 2% target. He expects the Fed to start cutting rates in June, ahead of the European Central Bank (ECB). He predicted the Fed would cut rates by 75-100 basis points by the end of the year.

Bank of America and other bank analysts also reported delaying the Fed's rate cut until the third quarter. Also, hawkish Fed policymakers including Atlanta Central Bank President Raphael Bostic and Fed Governor Christopher Waller are pushing back on aggressive policy easing bets, dampening expectations for an interest rate cut in March. Data released on Thursday showed initial job claims fell surprisingly to 187K, the lowest level since September last year.

For the ECB, J.P. Morgan advanced expectations for the start of rate cuts by the European Central Bank (ECB) to June from earlier in September. Now, the brokerage firm expects a 100 basis point (bps) rate cut by the end of the year compared to the previously expected 75 bps.