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JPMorgan and Citi Adjust Their Estimates on Federal Reserve Interest Rate Cuts
JPMorgan and Citi have modified their predictions for interest rate changes by the Federal Reserve following the release of stronger-than-expected employment figures.
By:
Mete Demiralp
08.06.2024 – 09:01
Update:
10 seconds ago
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Citigroup Inc. and JPMorgan Chase & Co. have updated their forecasts regarding the Federal Reserve’s interest rate adjustments. These institutions, previously among the few economists anticipating a rate cut in July, have now revised their outlooks.
Citigroup altered its forecasts in response to the release of robust employment data for May. The bank now anticipates that U.S. policymakers will initiate changes in September, while JPMorgan does not foresee any modifications until November.
Andrew Hollenhorst, Citigroup’s chief U.S. economist, elaborated on the shift in a recent report. “We are changing our primary scenario for the first interest rate cut from July to September,” he stated. Despite signs of a decelerating labor market and economy, Hollenhorst believes that the Fed’s pause is attributed to last month’s “remarkably strong employment growth,” as they await further data on slowing economic activity and inflation.
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Similarly, Michael Feroli, JPMorgan’s chief U.S. economist, argued in a report on Friday that the “recent surge in job creation” indicates that it may take more than three months for the “broader” labor market weakening, which the Fed has indicated could necessitate a rate cut, to materialize.
Citigroup’s updated forecast includes a three-quarter point rate cut in September, November, and December of this year. This marks a shift from the previous four-cut forecast, one at each Federal Reserve policy meeting from July to December. JPMorgan has revised its forecast to include only one rate cut this year, followed by one in each quarter of the next year.
As of this week, at least six other major Wall Street banks were projecting that the Fed would implement interest rate cuts in September, with at least four predicting the first cut to occur in December.
*This is not financial advice.
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