Rate cut, Fed will wait at least September 2024

Who expected a rate cut he still has to wait immediately. According to traders' forecasts, in fact, the Fedcentral bank of the United States of Americawill wait at least until September 2024 before providing for their reduction. As supported in recent days by Jerome Powell, president of the Federal Reserve, the data oninflation in the United States they do not allow us to think about a cut immediately.

Fed, rate cut only in September 2024

To influence the possibility of carrying out a cutting bank interest rates is, of course, the level of inflation which, in United States, was found to be more robust than expected in March 2024 for the third consecutive month. More specifically, consumer prices rose by 3.5 percentagainst the expected 3.4 percent, with a monthly increase of 0.4 percent and 3.8 percent on March 2023 for the core index, net of food and energy.

US inflation slows down the Fed

For the Fedtherefore, the scenario ofUS inflation it would not make it possible to provide, already a June 2024, as hoped rate cut of interest. The objective, for this situation to occur, is that the percentage relating to the general average level of prices of goods and services falls to 2 percent. The distance from this percentage, however, pushes analysts to think, or rather make it almost completely certain, that a June and July 2024 the Fed will not work to cut rates, with the cost reductions which in the current year could be at most two (one less than the three previously estimated by the bankers), both of a quarter of a point, for a total of the 0.5 percent.

Powell: “The Fed needs more certainty”

The news of failure to cut rates in the United States on the part of Fedhad been partly anticipated by the president of the institute itself, Jerome Powell, who, in a speech at Stanford University, had underlined the current absence of sufficient conditions for the central bank. “We do not expect – Powell said – that it will be appropriate to lower rates until we have greater confidence that inflation is moving sustainably downward towards 2 percent”. The Fed president himself then added that “given the strength of the economy and the progress made so far on inflation, we have time to evaluate the data that will arrive for our policy decisions”. A full-fledged postponement, therefore.

ECB, perhaps a rate cut in June

The wait-and-see positions of the Fed they have inevitable repercussions throughout the world, with the main economies of the globe trying to take cover as best they can. In Europe the ECBEuropean Central Bank, hopes for a cut in interest rates in the short term, despite underlining, at the end of the last meeting of the Governing Council on 6 and 7 March, that more data and confirmations of the European disinflation. The wait is therefore for the April data and, even more so, for those of June 2024, period in which, according to various readings, we may see a rate cut in Europe.