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
Jerome Powell in a chair

Even this guy doesn't know.