NEW YORK - In a recent financial show, Jefferies has projected that the Federal Reserve will begin "maintenance cuts" in March 2024, aiming for interest rates to settle between 2.75% and 3%. Jefferies economists cited slowing inflation and a bleak outlook for economic growth as the primary reasons behind this anticipation. The forecast suggests that the Federal Reserve might act ahead of its expected schedule, adjusting its course due to lagging indicators that veer off their intended "glide path."
Jefferies pointed out the strain of maintaining elevated funds rates, echoing sentiments expressed by Fed Governor Waller. The brokerage firm also raised concerns regarding consumer spending, which is currently outstripping savings rates that stand at a low 3%. This imbalance, according to Jefferies analysts, could jeopardize the high employment levels that have been a hallmark of the recent economy.
The prediction by Jefferies comes at a time when the Federal Reserve has been grappling with the dual challenge of controlling inflation without triggering a recession. The anticipated policy shift to lower interest rates would mark a significant change in the Fed's approach as it adapts to evolving economic conditions.
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