(Reuters) - Some major brokerages expect the U.S. Federal Reserve to lower interest rates in June, months later than what markets had predicted earlier this year, as sticky inflation fanned concerns of cutting rates too soon.
Fed minutes of the Jan. 30-31 session published last month signaled broad uncertainty among the policymakers about how long borrowing costs should remain at their current range of 5.25%-5.50% to bring inflation to the central bank's 2% target.
In the 12 months through February, consumer prices increased 3.2%, after advancing 3.1% in January, though the annual increase has slowed from a peak of 9.1% in June 2022.
Earlier in March, Chair Jerome Powell said the Fed was "not far" from gaining the confidence it needs in falling inflation to start easing rates.
Separately, a Reuters poll showed last week that a strong majority of economists believe the Fed will cut its key interest rate in June, in line with market expectations, though the likelihood has fallen close to 53% from a near 60% probability, according to CME's FedWatch tool. [ECILT/US]
Following are forecasts from some major brokerages on when they expect the first cut and the magnitude of expected cuts this year:
Brokerages First cut expected in Quantum (NASDAQ:QMCO) of Federal funds Number of cuts
cycle cuts expected target rate (Dec expected in 2024
in 2024 (basis '24)
points)
Goldman Sachs June (25 bps) 75 4.625% Three
bps
UBS Global June (25 bps) 75 bps 4.50%-4.75% Three
Wealth
Management
Morgan Stanley June (25 bps) 100 bps 4.38%
June (25
Wells Fargo bps) 100 bps 4.25%-4.50%
June (25 75 Three
J.P. Morgan bps) bps 4.50%-4.75%
June Three
BofA Global
Research
Citigroup June 75 bps 4.6%