(Reuters) -Several global brokerages have pushed back their expectations of the U.S. Federal Reserve starting to lower interest rates to September from June following a bigger-than-expected rise in March consumer prices, with some seeing a cut only in December.
The consumer price index (CPI) rose 0.4% last month and increased 3.5% on an annual basis. That compared with expectations of 0.3% gain on the month and 3.4% on a year-on-year basis, according to a poll of economists by Reuters.
The report comes after a stronger-than-expected jobs data in March, as well as a drop in the unemployment rate to 3.8% from 3.9% in February.
Markets are now pricing in a 19.4% chance of the Fed cutting rates in June, compared with 50% before the CPI data, according to CME FedWatch tool, while betting on a 44.4% chance for July and 67.8% for September.
Barclays, UBS Global Wealth Management, TD Securities, Wells Fargo are among brokerages shifting their view of the first rate cut to September, while Goldman Sachs, BNP Paribas (OTC:BNPQY) and Jefferies have pushed it to July from June.
Here are the forecasts from major brokerages following the March CPI data:
Brokerage First cut in Number of cuts Quantum (NASDAQ:QMCO) of cuts in Fed funds target
in 2024 2024 rate at end 2024
Goldman Sachs July 2 - -
J.P. Morgan July - - -
BofA Global Research 1 25 bps -
December
Barclays September (25 bps) 1 25 bps 5.00-5.25%
UBS Global Wealth Management * September (25 bps) 2 50 bps 4.75-5.00%
TD Securities September (25 bps) 2 50 bps 4.75-5.00%
Wells Fargo September (25 bps) 3 75 bps 4.50-4.75%
Standard Chartered (OTC:SCBFF) Q3 (most likely 2 50 bps 4.75-5.00%
July)
RBC Capital Markets December (25 bps) 1 25 bps 5.00-5.25%
Jefferies July - - -
BNP Paribas July 2 - -
HSBC June 3 75 bps
4.50-4.75%
Deutsche Bank December 1 - -
Macquarie December 1 25 bps
5.00-5.25%
Citigroup June - - -
Here are the forecasts from major brokerages before March CPI data:
Brokerage First cut in Number of cuts Quantum of cuts Fed funds target
in 2024 in 2024 rate at end 2024
Goldman Sachs June (25 bps) 3 75 bps 4.63%
J.P. Morgan June (25bps) 3 75 bps 4.50-4.75%
BofA Global Research June 3
Deutsche Bank June 100 bps 4.25-4.50%
UBS Global Wealth June (25 bps) 3 75 bps 4.50-4.75%
Management *
UBS Global Research * June (25 bps) 3 75 bps 4.50-4.75%
Morgan Stanley June (25 bps) 4 100 bps 4.38%
* UBS Global Research and UBS Global Wealth Management are distinct, independent divisions in UBS Group