Inflation Eases, Job Market Strong: Will the Fed Cut Rates in 2024?
- August rates are likely to remain steady.
- September may see a 25-50 basis point cut.
- Fed signals possible rate cuts delayed to 2025, with four cuts projected next year.
The CME “FedWatch” tool shows a 91.2% probability of the Federal Reserve maintaining current interest rates in August, with an 8.8% chance of a 25 basis point rate cut.
Meanwhile, the probability of the Fed keeping interest rates unchanged in September is 0%. Instead, there is an 85.7% likelihood of a cumulative 25 basis point rate cut. There’s also a 13.7% chance of a cumulative 50 basis point reduction, while a 75 basis point cut is considered highly unlikely, with only a 0.5% probability.
The Federal Reserve held rates steady in June, signaling that potential rate cuts might not occur until late December. Policymakers based this decision on the economic stability across key areas, particularly the growth and unemployment levels that currently exceed the U.S. central bank’s sustainability benchmark.
Fed Chair Jerome Powell stated that current rates would remain in place until the economy signals a need for change, either through a significant drop in inflation or a rise in the unemploy…
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