Fed Signals Interest Rate Cuts Coming Later This Year As Economy Slows

The US economy outperformed expectations in 2023, signaling continued solid growth into 2024. This questions if the Fed will cut interest rates this year as previously expected.

Fed Chair Jerome Powell testified rates will be cut later than anticipated - likely in June or July by around 0.5% from the current 5.38%.

With interest rates still restrictive at 5.38%, policy is reducing economic growth. The Fed will begin cutting rates this summer, likely with 0.25% cuts in June/July and before November.

More data confirms the economy is slowing - manufacturing has been in recession for 16 months and inflation is falling. Low income households are being squeezed by high loan rates.

The Fed wants to avoid bank failures and ensure commercial real estate debt can be refinanced. Rate cuts will achieve a soft landing for the economy.