After months of gruelling economic turmoil, the Fed might just surprise us this time with good news of cutting interest rates.
As the situation gets a bit better, is the Fed heading towards rate cuts?
Well to answer that question, we’ll just have to dive into this blog!!
Fed Meeting:
The US Federal Reserve is set to announce its 5th interest rate decision for 2024 tonight and wall street seems to expect the US Central Bank to keep the benchmark interest rates between 5.25 Percent – 5.50 percent today.
To this day, the Fed Chairman Mr. Jerome Powell has maintained this phenomenal interest rate market at 23 year high since July 2023 to anchor inflation. It seems like the Fed’s plans have worked and inflation has fallen below the inflation rate however the Fed is still waiting for “Giving a bit of confidence” before executing the rate cut.
FOMC rates – What’s the story to this date?
As per the previous monetary policy meeting that was held on June 12th, the powell led FOMC unanimously voted to hold the policy rate at the two decade high mark for the seventh straight meeting.
Furthermore, it also declared that it did foresee only a rate cut in 2024. Is the last day of July the lucky month?
Well, according to the FOMC member, the projection on the rate cuts are data dependent.
So we’ll have to wait and see but this next part might just convince you as to why this might be the time that the Fed just might change tides tonight in spite of Wall Street saying that Rates will be steady this time around.
Key indicators to look out for tonight:
As per the June verdict, the FOMC expects the core inflation to be 2.8 per cent by the year end and up from a previous forecast of 2.6 percent. Surprisingly the latest data showed that the US inflation has cooled down for the 3rd straight month and also rose to less than the expected amount in June thereby giving a huge boost to Wall Street’s bets on definite interest rate cuts by the US Federal Reserve.
The US consumer price index (CPI)—which excludes food and energy costs—slid 0.1 per cent in June after being unchanged in May. This was the smallest rise in three years and the weakest monthly reading since May 2020, when the COVID pandemic paralyzed the US economy.
The favourable inflation print of the world’s largest economy resulted from a long-awaited slowdown in housing prices – for which Wall Street economists said that the worst price rise in nearly four decades is gradually fading away.
US GDP – What does the data tell you?
As per the recent quarterly economic forecasts that have been issued by the Fed in the June meeting, policymakers had projected that the economy will grow 2.1 percent this year and 2 percent in 2025, the same as they had envisioned in March.
However the latest official data showed that real gross domestic products in the USA has increased at a rate of 2.8 percent for the April to June quarter for the financial year 2024 – 2025.
So this seems to be a good sign as well.
Unemployment Data -The Deciding Factor?
Unemployment has been an integral issue in the US for the past year. However the sun seems to be shining again here as the Fed said that it expects unemployment in the US will stay at its current four percent rate by the end of this year and would rise to 4.2 percent by the end of 2025.
The Labour department’s Bureau of Labor Statistics had said that its Job openings and Labour Turnover Survey or the JOLTS report had mentioned that the job opening rates had dropped to 460000 by the last day of June.
Final Note:
There has been a lot of speculation by Wall Street giants that a rate cut could be expected in November , however JP Morgan and Macquarie also said there might be initiated rate cuts to September from previously anticipated November.
Economy is strong, so the anticipation is that the Fed just might wait for the next CPI and PCE inflation trading as it reaches the Fed’s 2 percent target. So finger’s crossed we might get one tonight or one in September. The risk that the Fed might hold on a little longer are modest because the growth looks firm and steady in the face of the current level of rates.
Anticipating is high for the Fed meeting and we’re here to bring you the hottest news you’re looking for.
Stay tuned to our blog and also our YouTube channel to be updated with the market movements.
Until next time, Happy Trading!
Commodity Samachar
Learn and Trade with Ease
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