When Will FED Start Interest Rate Cuts? Wall Street Giants Divided Into Two!

Announcing the interest rate decision on the first day of November Fedhad kept interest rates constant in line with expectations.

In its last meeting, the FED said that it would continue to depend on data for interest rate cuts while keeping interest rates constant.

At this point, the FED is expected to start reducing interest rates in 2024. Wall Street banks There is disagreement on the timing of interest rate cuts.

According to Bloomberg, Morgan Stanley and UBS predict that the FED will make a major interest rate cut starting from the first half of 2024, while Goldman Sachs thinks that the FED will start cutting interest rates only at the end of 2024 and the rate of reduction will be slow.

UBSWith the assumption that the US economy will enter a recession as of the second quarter of 2024, it predicts that discounts will begin in March. According to UBS, this will lead the FED to reduce interest rates.

Bhanu Baweja, chief strategist at UBS Investment Bank Inflation is rapidly normalizing and by March the FED will be looking at very high real rates.” said.

At this point, UBS strategists stated that they estimate that interest rates will fall between 2.5% and 2.75% by the end of 2024, and will drop to 1.25% in early 2025.

Apart from UBS, Morgan Stanley economists led by chief economist Ellen Zentner also stated that they expect large interest rate cuts. “We expect interest rate cuts to start in June 2024. Then, we predict that there will be 25 basis point reductions in September and at each meeting starting from the fourth quarter. This rate of reduction will reduce the interest rate to 2.375% by the end of 2025.” they said.

Apart from UBS and Morgan Stanley, Goldman Sachs also expects a cut in interest rates, but does not think it will happen that quickly.

According to this Goldman SachsHe believes that the FED will make its first 25 basis point cut in the fourth quarter of 2024. After the first interest rate cut decision, the bank expects there to be a cut every quarter until mid-2026.

Bitcoin It hit its peak of $69,000 in November 2021, when the FED started increasing interest rates. Since the bear market that followed was directly related to the FED’s interest rate increases, it would be the result of a policy change and the start of interest rate reductions. BTCIt is thought that it may return to its old days again.

*This is not investment advice.