The Federal Reserve’s interest rate decisions are closely monitored during periods of economic uncertainty in the United States. For the first interest rate decision of 2024, which will be announced on Wednesday, interest rates are expected to be held steady. According to the CME, the probability of maintaining steady rates is shown to be 96.9%.
For the second interest rate decision in March, the probability of a 25 basis point cut in interest rates is shown as 47%, but some indicators and comments keep this probability above 50%. U.S. inflation indicators, on the other hand, show that inflation has significantly decreased from its peak levels.
Interest Rate Cuts Pointed to for March
Nevertheless, the Fed is expected to start lowering interest rates in March. According to SCMP, investors are almost equally weighing the possibility that the U.S. Central Bank will start reducing borrowing costs at the March meeting. On the other hand, there are concerns that consumer spending remains strong, which could apply inflation pressure. Additionally, the publication of the January unemployment rate in the U.S., which will be announced this week, will also be a significant factor.
Especially if inflation continues its downward trend, the Fed is expected to start lowering interest rates from March onwards.