Stalled progress against inflation and a robust labour market have pushed many analysts to predict that the rate-setting Federal Open Market Committee will not cut interest rates from their current 23-year high before September at the earliest.
"However, we share the universal expectation that the FOMC will keep its target range for the federal funds rate unchanged at 5.25 per cent -5.50 per cent at the conclusion of its policy meeting on June 12," they said. "At the June FOMC meeting, we see the Fed revising its outlook in favour of slower growth and firmer inflation," Bank of America economists wrote in an investor note published Friday.
Nevertheless, a September start to rate cuts would thrust the Fed into the middle of a fractious presidential campaign between President Joe Biden and his Republican opponent, Donald Trump, who has previously questioned the US central bank's independence.CUTTING BACK This marks a dramatic shift from late last year, when the financial markets were pricing in as many as six interest rate cuts for 2024, with the first of them coming as early as March.
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