U.S. Federal Reserve Cuts Interest Rates
(Reuters) – The U.S. Federal Reserve cut interest rates by an oversized 50 basis points in its Sept. 17-18 meeting. Chair Jerome Powell stated this action shows policymakers' commitment to sustaining a low unemployment rate now that inflation has eased.
Fed policymakers project that the benchmark interest rate will fall by another half percentage point by the end of this year, a full percentage point next year, and half a percentage point in 2026. However, they cautioned that the outlook that far into the future is inherently uncertain.
Forecasts from Major Banks on Economic Growth, Inflation, and Asset Classes
Stock, Currency, and Bond Forecasts
| Institution | S&P 500 | US 10-year | EUR/USD | USD/JPY | USD/CNY |
|---|---|---|---|---|---|
| Goldman Sachs | 6,000 | 3.85% | 1.08 | 150 | 7.20 |
| Morgan Stanley | 5,400 | 3.50% | 1.40 | 7.5 | |
| UBS Global Wealth | 5,200 | 3.85% | 1.09 | 148 | 7.20 |
| Wells Fargo | 6,200-6,400 | 3.75%-4.25% | 1.06-1.10 | 156-160 | |
| Investment Institute | 5,600 | 4.25% | 1.09 | 145 | 7.20 |
| J.P. Morgan | 4,200 | 3.55% | 1.13 | 146 | 7.25 |
| BofA Global Research | 5,400 | 3.50% | 1.12 | 151 | 7.30 |
| Deutsche Bank | 5,750 | 3.80% | 1.07 | 135 | |
| Citigroup | 5,600 | 4.20% | 1.08 | 141 | 7.20 |
| HSBC | 5,900 | 3.00% | 1.05 | 145 | 7.10 |
| Oppenheimer | 5,900 | ||||
| Evercore ISI | 6,000 | ||||
| RBC | 5,700 |
U.S. Inflation
U.S. consumer prices rose slightly more than expected in September, but the annual inflation increase was the smallest in over 3.5 years, possibly keeping the Federal Reserve on track to cut interest rates again in November.
| Institution | Headline CPI | Core PCE |
|---|---|---|
| Goldman Sachs | 2.6% | 2.7% |
| Morgan Stanley | 2.10% | 2.70% |
| Wells Fargo | 3.0% | 2.60% |
| Barclays | 2.9% | 2.6% |
| J.P. Morgan | 2.50% | 2.50% |
| BofA Global Research | 3.5% | 2.8% |
| Deutsche Bank | 3.10% | |
| Citigroup | 2.0% | 2.7% |
| HSBC | 3.4% |
Real GDP Growth Forecasts for 2024
| Area | Goldman Sachs | Morgan Stanley | UBS Global | Barclays | J.P. Morgan | BofA Global | Deutsche Bank | Citigroup | HSBC |
|---|---|---|---|---|---|---|---|---|---|
| GLOBAL | 2.7% | 2.8% | 3.1% | 2.6% | 2.7% | 3.1% | 3.2% | 2.6% | 2.6% |
| U.S. | 2.8% | 1.9% | 2.4% | 1.2% | 4.8% | 2.7% | 2.7% | 2.5% | 2.3% |
| CHINA | 4.9% | 4.2% | 4.9% | 5.0% | 0.9% | 4.8% | 4.7% | 4.7% | 4.9% |
| EURO | 0.9% | 0.5% | 0.6% | 0.3% | 0.9% | 0.7% | 0.9% | 1.0% | 0.5% |
| UK | 6.7% | -0.1% | 0.2% | 1.1% | 6.5% | 1.1% | 1.2% | 7.1% | 0.4% |
| INDIA | 0.8% | 6.4% | 7.0% | 6.2% | 0.8% | 7.1% | 7.0% | 6.3% |
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