The Fed's 50-basis-point rate cut is just a prelude, and there will be another rate cut this year!
According to the latest dot plot and market analysis, the Fed may take cumulative rate cuts in 2024, and the rate cut is expected to reach 100 basis points. At the September meeting, the Fed has implemented a 50-basis-point rate cut, adjusting the target range of the federal funds rate to 4.75% to 5.00%, the first rate cut since March 2020. The market generally expects that after the September rate cut, the Fed may further cut interest rates by 50 basis points this year to support economic growth and stabilize financial markets.
For monetary policy in 2025, the median forecast of Fed officials shows that they expect another 100 basis point rate cut, which is consistent with the rate cut expected in the June dot plot. This shows that Fed officials have a certain consensus on the forecast of the economic outlook and the adjustment path of monetary policy.
However, there are different voices in the market about the Fed's expectations for rate cuts. Some analysts believe that if inflation remains high or falls more slowly than expected, the Fed may only cut interest rates once in December 2024, or even postpone it until 2025. In addition, the results of the US election may also have an impact on the Fed's policy decisions, as political factors sometimes put pressure on the independence of central banks.
Overall, the Fed's monetary policy will depend on changes in a variety of economic indicators and the global economic environment, including inflation rates, job market conditions, and global economic growth prospects. Market participants need to pay close attention to the Fed's policy statements, economic data releases, and officials' speeches to get more clues about the future interest rate path
