Morgan Stanley economists are forecasting that Federal Open Market Committee (FOMC) will make deep interest-rate cuts over the next two years as inflation cools.
Goldman Sachs, on the other hand, expect fewer reductions and a later start.
Bloomberg have a piece up comparing the divergent views. Bloomberg is gated but the main points are:
MS expect the Fed to start cutting rates in June 2024
- then cut again in September and every meeting from Q4 2024 onward
- cut by 25-basis point each time
- will therefore take Fed Funds down to 2.375% by the end of 2025
Goldman Sachs' projection
- initial 25-basis-point reduction in Q4 2024
- one cut per quarter through to the middle of 2026
- total of 175 basis points in cuts
- taking Fed Funds down to a 3.5%-3.75% target range
Even this guy doesn't know.
