According to recent forecasts, a reduction in the Fed's interest rates is expected at the September meeting. Both JPMorgan and Fitch Ratings have shared their expectations regarding this matter.
Fed Rate Predictions
JPMorgan announced that it expects a 25 basis point cut in the Fed's interest rates at the September meeting. However, uncertainties surrounding inflation data may influence the timing of this decision.
Impact of Inflation Data on the Market
The bank forecasts the August Consumer Price Index (CPI) to remain at 2.9% year-over-year, with the core CPI at 3.1%. Higher inflation numbers could delay the rate cut until October or December. It was also noted that a core CPI reading above 0.40% could lead to a decline of 1.5-2% in the S&P 500 index.
Economic Situation and Expert Opinions
JPMorgan CEO Jamie Dimon remarked that the Fed is likely to cut interest rates, though it may not be a direct result of economic developments. Fitch Ratings added that the slowdown in the US economy is becoming increasingly apparent, and a weakening labor market may force the Fed to act more quickly. The agency expects a 25 basis point cut in September and December.
Expectations for a Fed rate cut in September are becoming more pronounced, yet economic and inflation data could significantly impact the final decision and its ramifications for financial markets.
