Central Banks
Fed Starts to Confront the Next Big Question: Why to Cut Rates
- If it’s because of a US recession, that’s bad news all around
- Fed’s dot plot likely to project fewer rate cuts than markets
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The most important question facing the economy and financial markets next year is not whether the Federal Reserve will cut interest rates. It’s why.
With inflation having fallen dramatically from multi-decade highs last year, rate reductions in 2024 look increasingly likely. After holding policy steady for the third straight meeting this week, Fed Chair Jerome Powell and his colleagues are expected to use their “dot-plot” to forecast rate cuts in 2024 – though probably not nearly as many as investors and economists are expecting.