The majority of economists predict that there will be no rate hikes by the U.S. Federal Reserve for 2023, according to a newly published Reuters poll. However, rate cuts are not expected until March 2024. This survey comes just ahead of the annual Jackson Hole Economic Symposium, where market watchers eagerly await remarks from Fed Chairman Jerome Powell. The sentiment among economists and the market is that the central bank is putting the brakes on, with a high probability of rates remaining unchanged in the near future. Nevertheless, all eyes are on Powell’s upcoming speech as investors look for guidance on the Fed’s policy for the rest of the year.
Market Forecasts No Rate Cuts Through 2023; Powell’s Jackson Hole Remarks Could Shift Outlook
A newly published Reuters poll reveals that most economists concur: the U.S. Federal Reserve has likely capped its rate hikes. Yet, rate cuts aren’t anticipated until March 2024. This survey drops just as markets approach the annual Jackson Hole Economic Symposium scheduled for next week. All eyes are on Fed chairman Jerome Powell, as investors eagerly await his remarks.
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Survey Results: Majority of Economists Predict No Rate Hikes for September
Following the recent uptick in the federal funds rate (FFR), the U.S. central bank is seemingly hitting the brakes. This sentiment is echoed by the lion’s share of economists surveyed by Reuters. Of the 110 economists polled, a staggering 90% – 99 of them – predict the rate will remain unchanged this September at the forthcoming Federal Open Market Committee (FOMC) meeting. Furthermore, about 80% opine that we won’t see any additional rate hikes for the remainder of the year.
CME Group’s Fedwatch Tool shows that the market is pricing in the belief that there will be no rate hike this September. There’s roughly an 89% probability of no changes at the September 22 FOMC gathering and an 11% chance that there will be a 25 basis point rise. Out of the polled participants, 23 anticipate one more rate hike this year, while a pair of economists foresee the FFR jumping twice more. Approximately, 48 out of 95, predict the Fed will maintain rates till the end of March.
Market Sentiment: Unlikely Rate Hike in September
CME Group’s Fedwatch Tool paints a clear market sentiment: a rate hike this September seems unlikely. The odds? An 89% likelihood that the Federal Open Market Committee (FOMC) will stand pat on September 22 and a slim 11% possibility of a 25 basis point ascent. Among those surveyed, 23 of them forecast a solitary rate increase this year, while two economists envision the FFR surging twice. Of the lot, nearly half, precisely 48 out of 95, believe the Fed will stay its hand on rate changes until March’s end.
Potential Rate Increase for Rest of the Year
Two economists bet a rate cut could take place by the end of 2023’s final quarter. “We have long seen a high threshold for cutting because Fed officials will want to minimize the risk they could regret cutting if inflation stays too high,” David Mericle, the chief U.S. economist at Goldman Sachs told Reuters. Predictions may change, however, after Fed chair Jerome Powell speaks at the Jackson Hole Economic Symposium on August 25. Investors are hoping Powell will shed light on policy for the end of the year.
Predictions for Fed’s Rate Plan Until March
CME Group’s Fedwatch Tool indicates that the majority of economists believe the Fed will maintain rates until the end of March. Out of the 95 participants surveyed, 48 predict no rate changes until March, while others anticipate a single rate hike or even two. However, these predictions are subject to change following Jerome Powell’s remarks at the Jackson Hole Economic Symposium.
Two Economists Bet on Rate Cut by End of 2023
While the general consensus among economists is that the U.S. Federal Reserve is unlikely to implement rate cuts until March 2024, two economists are placing their bets on a rate cut by the end of 2023’s final quarter. David Mericle, the chief U.S. economist at Goldman Sachs, explains that there is a high threshold for cutting rates due to concerns about high inflation. He suggests that Fed officials will be cautious about cutting rates and will want to minimize the risk of regretting such a decision. However, it remains to be seen how Powell’s remarks at the Jackson Hole Economic Symposium will influence these predictions.
High Threshold for Rate Cuts
The hesitation around implementing rate cuts is due to the high threshold set by the Federal Reserve. Fed officials are cautious about cutting rates prematurely and want to ensure that inflation remains under control. This cautious approach is a result of the potential risk of regretting the decision if inflation stays too high. Therefore, despite the speculation of rate cuts, economists and investors are aware that the threshold for rate cuts remains high.
Impact of Jerome Powell’s Remarks at Jackson Hole Symposium
All eyes are on Jerome Powell, the chairman of the Federal Reserve, as he prepares to deliver his remarks at the Jackson Hole Economic Symposium. Investors are eagerly awaiting Powell’s insights and guidance regarding the Fed’s rate plan for the remainder of the year. Powell’s remarks have the potential to shift the market outlook and influence economists’ predictions about rate cuts. The symposium serves as an important platform for Powell to address concerns and provide clarity on the Fed’s future actions.
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Market Expectations: Unlikely Rate Hike in September
Considering the survey results and market sentiment, it is highly unlikely that the Federal Reserve will implement a rate hike in September. CME Group’s Fedwatch Tool indicates a strong probability that the FOMC will maintain the current rates. The majority of economists surveyed also believe that there will be no rate changes until March. These expectations are based on the current economic conditions and the cautious approach taken by the Fed.
Conclusion
In conclusion, the market forecasts suggest that the U.S. Federal Reserve is unlikely to implement rate cuts until March 2024. The majority of economists surveyed believe that there will be no rate hikes in September and no further rate changes for the remainder of the year. However, predictions may change based on Jerome Powell’s remarks at the Jackson Hole Economic Symposium. Investors and economists are eagerly awaiting Powell’s insights to gain a clearer understanding of the Fed’s rate plan for the coming months.
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