Federal Reserve Expected to Begin Gradual Interest Rate Cuts in 2024, But Remains Cautious on Recession Risks
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The Federal Reserve will likely start cutting interest rates in mid-2024, but the cuts will be gradual over time.
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The Fed's decision on interest rates will depend on data regarding the risk of recession and the movement of inflation. Currently the risk of recession seems to be declining.
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Inflation data indicates the Fed's tightening policies have worked to bring down inflation, but employment data suggests there's no rush to cut rates.
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The Fed aims to be cautious about cutting rates due to uncertainty in forecasting inflation recently and concerns the recession was only delayed, not prevented.
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Long-term Treasury bond and mortgage rates have already declined some in anticipation of the Fed eventually cutting short-term rates. Mortgage rates may still remain around 6% for some time.